<PAGE>
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/ X / ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
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
incorporation or organization) Identification No.)
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:
$474,178,432 at February 28, 1995.
Number of shares outstanding of each of the registrant's classes of common
stock, as of February 28, 1995:
Common Stock, $1 par value 16,934,944 shares
Documents Incorporated by Reference:
WICOR, Inc. proxy statement dated March 10, 1995 (Part III)
WICOR, Inc. 1994 Annual Report to Shareholders (Parts I and II)<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 1
C. Gas Supply and Pipeline Capacity 3
(1) General 3
(2) Pipeline Capacity 4
(3) Term Gas Supply 4
(4) Spot Market Gas Supply 4
D. Wisconsin Regulatory Matters
(1) Rate Matters 5
(2) Transition Cost Recovery Policy 5
(3) Service Area Expansion 5
(4) Changing Regulatory Environment 5
E. Employees 5
2. Manufacturing and Sale of Pumps and Water
Processing Equipment 6
A. General 6
B. U.S. Operations 6
C. International Operations 6
D. Raw Materials and Patents 7
E. Employees 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
Item 3. Legal Proceedings 7
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<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 12
Item 12. Security Ownership of Certain
Beneficial Owners and Management 12
Item 13. Certain Relationships and Related
Transactions 12
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. All Financial Statements and Financial
Statement Schedules 12
2. Financial Statement Schedules 12
3. Exhibits 12
(b) Reports on Form 8-K 15
<PAGE>
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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 and
sale 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. 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. The Company
acquired all of the outstanding common stock of Sta-Rite through a merger in
1982.
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 purifications
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.
At December 31, 1994, the Company (including subsidiaries) had 3,214 full-
time equivalent employees.
(b) Financial Information About Industry Segments
Reference is made to the section entitled "Financial Review-General
Overview" set forth in the Company's 1994 Annual Report to Shareholders. Such
section is included in Exhibit 13 hereto and is hereby incorporated herein by
reference.
(c) Narrative Description of Business
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, 1994,
Wisconsin Gas distributed gas to approximately 495,000 residential, commercial
and industrial customers in 496 communities throughout Wisconsin having an
estimated population of 1,458,000 based on the State of Wisconsin's estimates
for 1994. 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
<PAGE>
<PAGE> 5
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, arranging
transportation, and managing other aspects of acquisition, transportation and
use of gas. 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 of gas), 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 Year Ended
December 31, 1994 December 31, 1993
-------------------- --------------------
Thousands Thousands
Customer Class of therms* Percent of therms* Percent
--------------------------- ---------- ------- ---------- -------
<S> <C> <C> <C> <C>
Residential 463,690 38.8 479,640 39.8
Commercial 185,980 15.5 190,600 15.8
Large Volume Commercial and
Industrial Firm 145,440 12.2 152,460 12.7
Commercial and Industrial
Interruptible 282,170 23.6 208,490 17.3
Transported 119,080 9.9 174,080 14.4
---------- ------- ---------- -------
Total Gas Purchased and
Transported 1,196,360 100.0 1,205,270 100.0
========== ======= ========== =======
</TABLE>
*One therm equals 100,000 BTU's.
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 establishing the peak day and
annual gas requirements that Wisconsin Gas is obligated to supply. The service
options program 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 "Wisconsin Regulatory Matters - Gas Supply and Pipeline
Capacity."<PAGE>
<PAGE> 6
In 1994, Wisconsin Gas became the first utility in the country to offer its
large customers the option of locked or capped pricing. Under the locked
pricing option, Wisconsin Gas will sell gas at an agreed fixed unit price for
a specified period of time, such as a year. Under the capped pricing option,
Wisconsin Gas will sell gas at a price not to exceed an agreed unit price.
These pricing options enable large customers to budget their gas costs more
precisely and also assist Wisconsin Gas in retaining large customers.
The PSCW has instituted a proceeding to consider how its regulation of gas
distribution utilities should change to reflect the changing competitive
environment in the gas industry. See "Wisconsin Regulatory Matters."
In 1994, Wisconsin Gas added more than 10,000 customers. See "Wisconsin
Regulatory Matters - 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 33% of Wisconsin Gas' annual deliveries, it contributes only about
12% of Wisconsin Gas' margin.
C. Gas Supply and Pipeline Capacity
(1) General
Prior to the Federal Energy Regulatory Commission's ("FERC") Order No. 636,
the interstate pipelines serving Wisconsin Gas were the primary suppliers of
natural gas to Wisconsin Gas. During the transition period prior to the
implementation of Order No. 636, Wisconsin Gas gradually assumed responsibility
for the acquisition of supply in the production areas of North America, as well
as the management of transportation and storage capacities to deliver that
supply to its market area. On November 1, 1993, Wisconsin Gas commenced full
operation and responsibility for its supply and capacity under the requirements
of Order No. 636.
One of the provisions of Order No. 636 is capacity release. Capacity
release creates a secondary market for pipeline capacity and gas supplies.
Local distribution companies, such as Wisconsin Gas, must contract for capacity
and supply sufficient to meet the peak day firm demand of their customers. Peak
or near peak days occur only a few times each year, so capacity release
facilitates higher utilization of capacity during those times when the capacity
is not needed by the utility. Through pre-arranged agreements and day-to-day
electronic bulletin board postings, interested parties can purchase that
capacity. The proceeds from these transactions are passed-through to
ratepayers, thereby helping to offset the costs associated with holding the
capacity. During 1994, Wisconsin Gas was an active participant in the capacity
release market.
During 1993-94, the first year of operating under Order No. 636, Wisconsin
Gas Company was able to meet its contractual obligations with both its suppliers
and its customers despite unseasonably cold weather in January and February 1994
and unseasonably warm weather in November and December 1994.<PAGE>
<PAGE> 7
The following table sets forth the volumes of natural gas purchased by
Wisconsin Gas and the volumes transported for customers.
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1994 December 31, 1993
-------------------- --------------------
Thousands Thousands
Natural Gas Purchased of Therms* Percent of Therms* Percent
------------------------- ---------- ------- ---------- -------
<S> <C> <C> <C> <C>
ANR 0 0.0 467,544 38.8
NNG 0 0.0 20,348 1.7
Viking 0 0.0 11,917 1.0
Term contracts
(in excess of 30 days) 980,170 81.9 398,197 33.0
Spot Market 97,110 8.1 133,184 11.1
---------- ------- ---------- -------
Total Gas Purchased 1,077,280 90.0 1,031,190 85.6
Customer Gas Transported 119,080 10.0 174,080 14.4
---------- ------- ---------- -------
Total Gas Purchased
and Transported 1,196,360 100.0 1,205,270 100.0
========== ======= ========== =======
</TABLE>
*One therm equals 100,000 BTU's.
Wisconsin Gas purchased no gas from ANR, NNG and Viking in 1994 because
Order No. 636 prohibits pipelines from selling gas as they did historically.
(2) Pipeline Capacity
Interstate pipelines serving Wisconsin originate in three major gas
producing areas of North America: the Oklahoma and Texas basins, the Gulf of
Mexico 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.
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 are no known underground storage
formations in Wisconsin capable of commercialization. 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-round. 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.<PAGE>
<PAGE> 8
Maximum Daily
(Thousands
Pipeline of Therms*)
------------------ -------------
ANR
Mainline 2,999
Storage 4,879
NNG
Mainline 1,077
Storage 150
Viking
Mainline 64
Peaking Facilities 54
-------------
Total 9,223
=============
*One therm equals 100,000 BTU's.
(3) Term Gas Supply
Wisconsin Gas has term firm contracts (initial terms in excess of 30 days)
with approximately 30 gas suppliers for gas produced in each of the three
producing areas discussed above. The term contracts have varying durations so
that only a portion of Wisconsin Gas' gas supply expires in any year. Wisconsin
Gas believes the volume of gas under contract is sufficient to meet its
forecasted firm peak day demand. The following table sets forth Wisconsin Gas'
winter season maximum daily firm total gas supply.
Maximum Daily
(Thousands
of Therms*)
-------------
Domestic flowing gas 2,387
Canadian flowing gas 1,396
Storage withdrawals 5,029
-------------
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.
D. Wisconsin 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.
In July 1993, Wisconsin Gas submitted an incentive rate making proposal to
the PSCW. The PSC significantly modified Wisconsin Gas' proposal in its
November 1994 rate order. Under the PSCW rate order, Wisconsin Gas' rates are
subject to a three year margin rate cap (through October 1997) based on the
rates approved in November 1993. The PSCW order also specified margin rate
floors for each rate class. Wisconsin Gas has the ability to raise or lower
margin rates within the specified range on a quarterly basis. The rates at
December 31, 1994 were at the top of the range. In addition, the PSCW
<PAGE>
<PAGE> 9
order required Wisconsin Gas to reduce its rates by $10.1 million, on an
annual basis, to reflect a reduction in certain non-cash expenses. Over a
twelve month period, beginning with the effective date of the order, this rate
reduction will result in no net income impact, but will reduce cash flow. The
rate order was effective November 14, 1994.
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
"Wisconsin Rate Matters - 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 7 to Notes to Consolidated Financial
Statements contained in Exhibit 13, the Company's 1994 Annual Report to
Shareholders, 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 1994, Wisconsin Gas extended service to nine new communities and added 10,000
customers. Over the last four years, Wisconsin Gas has extended service to 99
new communities and added 42,000 customers.
(4) Changing Regulatory Environment
The PSCW has instituted a proceeding to consider how its 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. The PSCW has identified numerous issues which must be resolved before
its policy can be implemented. A generic proceeding has been instituted during
which these issues will be aired and decided. Hearings are scheduled to begin
in January 1996, with the expectation that the new regulatory framework will be
implemented by the end of 1996. The Company is unable to determine what impact
this proceeding may have on Wisconsin Gas' operations or financial position.
E. Employees
At December 31, 1994, Wisconsin Gas had 1,166 full-time equivalent active
employees.
2. MANUFACTURING AND SALE OF PUMPS AND
WATER PROCESSING EQUIPMENT
A. General
The Company's manufacturing subsidiaries manufacture and sell 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, Germany, Italy,
Australia, New Zealand and Russia.<PAGE>
<PAGE> 10
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 also 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 pro-
ducer 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", "AQUALITY" and "AQUA TOOLS".
Domestic pumps and water products are sold and serviced primarily through
a network of independent distributors, dealers, retailers and manufacturers'
representatives serving the well drilling, hardware, plumbing, pump installing,
irrigation, pool and spa, food service, recreational vehicle, marine, industrial
and do-it-yourself 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 manufac-
turing of products from imported and locally manufactured components is carried
out by United Kingdom, German, 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 37% of 1994
manufacturing sales.<PAGE>
<PAGE> 11
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, 1994, the manufacturing businesses had 2,048 full time
equivalent active employees.
Item 2. PROPERTIES
(a) Capital Expenditures
The Company's capital expenditures for the year ended December 31, 1994,
totaled $55.1 million. Retirements during this period totaled $10.1 million.
Except as discussed in "Legal Proceedings", the Company does not expect to make
any material capital expenditures for environmental control facilities in 1995.
(b) Retail Distribution of Natural Gas
Wisconsin Gas owns a distribution system which, on December 31, 1994,
included approximately 8,100 miles of distribution and transmission mains,
407,000 services and 498,000 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 stations, 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 11 manufacturing facilities located in
California (2), Nebraska, Wisconsin (2), Germany, Australia (2), Italy, New
Zealand and Russia. These plants contain a total of approximately 1,408,000
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 England and France, and one each in Canada, Mexico, New Zealand and Singa-
pore.<PAGE>
<PAGE> 12
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 ("WDNR") 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 since 1991. Although
management believes the amounts reserved will be adequate to effect any
necessary restoration, there is a possibility that additional costs may be
incurred.
In separate lawsuits filed on April 18, 1994, the State of California and
two environmental groups sued Sta-Rite and other submersible pump manufacturers
claiming violation of the California's Health and Safety Code (Proposition 65).
The lawsuits allege certain pumps under certain conditions leach lead into the
ground water, resulting in lead levels in drinking water in violation of
Proposition 65. The lawsuits seek, among other remedies, injunctive relief and
unspecified monetary penalties. Based upon information supplied to it by the
environmental groups, the U.S. Environmental Protection Agency advised all
owners of certain new submersible well pumps to have their water tested. Based
upon its own testing and information currently available, including information
from several state agencies, Sta-Rite has established reserves believed to be
adequate with respect to these actions and intends to vigorously defend against
the claims made. Although management believes the amounts reserved will be
adequate to cover any costs, there is a possibility that additional costs may
be incurred in the future.
In July 1994, Sta-Rite was notified by the WDNR that it believed solvents
used at a manufacturing site previously operated by Sta-Rite have migrated and
contributed to the contamination of a Deerfield, Wisconsin municipal well,
serving Deerfield residents, and surrounding property. Based upon the
preliminary investigation and reserves established, the Company believes that
the resolution of this matter will not have a material adverse effect upon its
financial condition. However, there is a possibility that costs in excess of
the amount reserved may be incurred in the future.
A lawsuit brought in 1993 by Waste Management of Wisconsin, Inc. against
Sta-Rite and other generators for cleanup costs relating to a landfill near Sta-
Rite's former Deerfield location was resolved in 1994 within the reserves
established.
Sta-Rite is also involved in environmental matters with respect to certain
other sites. The Company has established accruals for all presently known and
quantifiable environmental contingencies relating to these sites in accordance
with generally accepted accounting principles. In establishing these accruals,
management considered (a) reports of environmental consultants retained by Sta-
Rite, (b) the costs incurred to date by Sta-Rite at sites where clean-up is
presently ongoing and the estimated costs to complete the necessary restoration
work remaining at such sites, (c) the financial solvency, where appropriate, of
other parties that have been responsible for restoration at specified sites,
and (d) the experience of other parties who have been involved in the
restoration<PAGE>
<PAGE> 13
of comparable sites. The accruals recorded by the Company with respect to the
foregoing environmental matters have not been reduced by potential insurance or
other recoveries and are not discounted. Based on the foregoing and given
current information, management believes that future costs in excess of the
amounts accrued on all presently known and quantifiable environmental
contingencies will not be material to the Company's financial position or
results of operations. With respect to several other sites in which Sta-Rite
may have environmental liability, management is currently conducting
investigation to determine the scope, if any, of Sta-Rite's potential liability
regarding the restoration of such sites and the estimated costs of the
restoration. As a result of the preliminary nature of the investigations, no
reasonable estimate can be given regarding the costs, if any, that Sta-Rite may
incur with respect to these sites. 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 restoration alternatives available, the
Company has estimated that cleanup costs could range from $22 million to $75
million. As of December 31, 1994, the Company has accrued $37.2 million for
cleanup costs in addition to $4.0 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
restoration 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.
The WDNR issued a Potentially Responsible Party letter to Wisconsin Gas for
these two sites in September 1994. Following receipt of this letter, Wisconsin
Gas and WDNR held an initial meeting to discuss the sites. At the meeting it
was agreed that Wisconsin Gas would prepare a remedial action options report
from which it will select specific restoration actions for recommendation to the
WDNR. This information will be prepared in 1995. Barring unforeseen delays,
expenditures by Wisconsin Gas on restoration work could commence as early as
1995 and will increase in future years as plan approvals are obtained.
Expenditures over the next several years are expected to total approximately $20
million. Although most of the work and costs are expected to be incurred in the
first several years of the plan, monitoring of sites and other necessary actions
may be undertaken for up to 30 years.
In February 1994, Wisconsin Gas commenced suit against nine insurance
carriers seeking a declaratory judgment regarding insurance coverage for the two
sites. Settlements were reached with each of the carriers during 1994. If the
amount recovered from the insurance carriers is insufficient to remediate both
sites, expenditures not recovered will be allowed full recovery (other than for
carrying costs) in rates based upon recent PSCW orders. Accordingly, the
accrual for future restoration costs has been deferred as a regulatory asset.
Certain related investigation costs incurred to date are currently being
recovered in utility rates.
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 WDNR and has sent the report of its assessment to the WDNR. Management
cannot predict whether or not the WDNR will require any restoration action, nor
the extent or cost of any restoration actions that may be required. In the
judgment of management, any restoration costs incurred by Wisconsin Gas will be
recoverable from the City of Milwaukee or in Wisconsin Gas' rates pursuant to
the PSCW's orders discussed above.
See Note 7 to Notes to Consolidated Financial Statements contained in
Exhibit 13, the Company's 1994 Annual Report to Shareholders, which note is
hereby incorporated herein by reference.<PAGE>
<PAGE> 14
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 1994.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following sets forth the names and ages of, and the offices held by,
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 59 President and Chief
Executive Officer of the
Company, and Chairman of
Wisconsin Gas, Sta-Rite
and SHURflo
Thomas F. Schrader 45 Vice President of the
Company and President and
Chief Executive Officer of
Wisconsin Gas
James C. Donnelly 49 Vice President of the
Company and President and
Chief Executive Officer of
Sta-Rite
Joseph P. Wenzler 53 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>
Each of the executive officers has held his position for more than five
years, except as follows:
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.
Mr. Donnelly was elected President and Chief Executive Officer of Sta-
Rite in 1994. He has been a Vice President of the Company since 1987.
Previously, he served as President and Chief Operating Officer of Sta-Rite
from 1992 to 1994, and as Vice President, Treasurer and Chief Financial
Officer of the Company and Wisconsin Gas from 1990 to 1992. 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.<PAGE>
<PAGE> 15
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 and as Treasurer and Secretary of SHURflo in 1993.
Prior thereto, he served as Vice President of the Company and President and
Chief Executive Officer of Sta-Rite from 1990 to 1992, and President and
Chief Operating Officer of Sta-Rite from 1986 to 1990.
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 independently 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 1994 and 1993, see the section entitled "Investor
Information" set forth in the Company's 1994 Annual Report to Share-
holders. Such section is included in Exhibit 13 hereto and is
hereby incorporated herein by reference.
At December 31, 1994, there were 16,517 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, the Company's Annual Report to Shareholders, which note is hereby
incorporated herein by reference.
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, 1995. See Note 6 of Notes to Consolidated
Financial Statements contained in Exhibit 13, the Company's 1994 Annual
Report to Shareholders, 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, 1994,
Wisconsin Gas' average common equity level was 48.82%.
In addition, $8.5 million of Sta-Rite net assets at December 31, 1994,
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, the Company's 1994 Annual Report to Shareholders, which note
is incorporated herein by reference.
Item 6. SELECTED FINANCIAL DATA
Reference is made to the section entitled "Selected Financial Data" set
forth in the Company's 1994 Annual Report to Shareholders. Such section is
included in Exhibit 13 hereto and is hereby incorporated herein by
reference.<PAGE>
<PAGE> 16
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Reference is made to the section entitled "Financial Review" set forth
in the Company's 1994 Annual Report to Shareholders. Such section is
included in Exhibit 13 hereto and is hereby incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to the WICOR, Inc. consolidated balance sheets and
consolidated statements of capitalization as of December 31, 1994 and 1993,
and the related consolidated statements of income, common equity and cash
flow for each of the three years in the period ended December 31, 1994,
together with the report of independent public accountants dated February 2,
1995, all appearing in Exhibit 13, the Company's 1994 Annual Report to
Shareholders, 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.
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, 1995, 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" included in Part I hereof 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, 1995, 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, 1995, 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, 1995, which is hereby incorporated
herein by reference, for the information required to be disclosed under this
item.<PAGE>
<PAGE> 17
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. All Financial Statements. The WICOR, Inc. consolidated balance
sheets and statements of capitalization as of December 31, 1994 and
1993, and the related consolidated statements of income, common
equity and cash flow for each of the three years in the period ended
December 31, 1994, together with the report of independent public
accountants dated February 2, 1995, included in Exhibit 13, the
Company's 1994 Annual Report to Shareholders, which is incorporated
herein by reference.
2. Financial statement schedules.
Schedule III -- Condensed Statements of Income, Retained Earnings
and Cash Flow (Parent Company Only) for the Years
Ended December 31, 1994, 1993 and 1992; Condensed
Balance Sheets (Parent Company Only) as of
December 31, 1994 and 1993; Notes to Parent
Company Only Financial Statements.
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 Amendment to WICOR, Inc. By-laws, effective February 28,
1995.
3.3 WICOR, Inc. By-laws, as amended.
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 (incorporated by reference
to Exhibit 4.6 to Wisconsin Gas Company's Form S-3
Registration Statement No. 33-43729).<PAGE>
<PAGE> 18
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).
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's 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 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).
4.10 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).
4.11 Extension of Revolving Credit and Term Loan Agreements,
effective March 29, 1994, among WICOR, Inc., Wisconsin Gas
Company and Sta-Rite Industries, Inc., respectively, and
Citibank, N.A., Firstar Bank Milwaukee, N.A., Harris Trust &
Saving Bank, M&I Marshall & Ilsley Bank and Citibank, N.A.,
as Agent.
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).
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).<PAGE>
<PAGE> 19
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. (incorporated by reference to Exhibit
10.2 to the Company's Form 10-K Annual Report for 1993).
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 connec-
tion 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).
10.7# WICOR, Inc. 1994 Long-Term Performance Plan (incorporated by
reference to Exhibit 4.1 to the Company's Form S-8
Registration Statement No. 33-55755).
10.8# Form of nonstatutory stock option agreement used in
connection with the WICOR, Inc. 1994 Long-Term Performance
Plan, (incorporated by reference to Exhibit 4.2 to the
Company's Form S-8 Registration Statement No. 33-55755).
10.9# Form of restricted stock agreement used in connection with
the WICOR, Inc. 1994 Long-Term Performance Plan
(incorporated by reference to Exhibit 4.3 to the Company's
Form S-8 Registration Statement No. 33-55755).
10.10# WICOR, Inc. 1995 Officers' Incentive Compensation Plan.<PAGE>
<PAGE> 20
10.11# Wisconsin Gas Company Principal Officers' Supplemental
Retirement Income Program (incorporated by reference to
Exhibit 10.8 to the Company's Form 10-K Annual Report for
1993).
10.12# Wisconsin Gas Company 1995 Officers' Incentive Compensation
Plan.
10.13# 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).
10.14# 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).
10.15# 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).
10.16# Sta-Rite Industries, Inc. Officers Supplemental Retirement
Income Program (incorporated by reference to Exhibit 10.28
to the Company's Form 10-K Annual Report for 1989).
10.17# Sta-Rite Industries, Inc. 1995 Officers' Incentive
Compensation Plan.
10.18# 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).
10.19# 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).
13 Portions of the WICOR, Inc. 1994 Annual Report to
Shareholders incorporated by reference herein.
21 Subsidiaries of WICOR, Inc.
23 Consent of independent public accountants.
27 Financial Data Schedule.
99 WICOR, Inc. proxy statement dated March 10, 1995. (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.)
#Indicates a plan under which compensation is paid or payable to directors or
executive officers of the Company.
(b) Reports on Form 8-K.
No Current Report on Form 8-K was filed during the fourth quarter of
1994.
<PAGE>
<PAGE> 21
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 13, 1995 By JOSEPH P. WENZLER
------------------------------
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> 22
WICOR, Inc.
<TABLE>
<CAPTION>
Signature Title Date
------------------------ ----------------------------- --------------
<S> <C> <C>
GEORGE E. WARDEBERG
George E. Wardeberg President, Chief Executive March 13, 1995
Officer and Director
(Principal Executive Officer)
JOSEPH P. WENZLER
Joseph P. Wenzler Vice President, Treasurer March 13, 1995
and Chief Financial Officer
(Principal Financial Officer
and Principal Accounting
Officer)
WENDELL F. BUECHE Director March 13, 1995
Wendell F. Bueche
WILLIE D. DAVIS Director March 13, 1995
Willie D. Davis
JERE D. MCGAFFEY Director March 13, 1995
Jere D. McGaffey
DANIEL F. MCKEITHAN, JR. Director March 13, 1995
Daniel F. McKeithan, Jr.
GUY A. OSBORN Director March 13, 1995
Guy A. Osborn
THOMAS F. SCHRADER Director March 13, 1995
Thomas F. Schrader
STUART W. TISDALE Director March 13, 1995
Stuart W. Tisdale
ESSIE M. WHITELAW Director March 13, 1995
Essie M. Whitelaw
WILLIAM B. WINTER Director March 13, 1995
William B. Winter
/TABLE
<PAGE>
<PAGE> 23
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 2, 1995. 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 9 to the consolidated financial statements. Our audit was made for the
purpose of forming an opinion on those statements taken as a whole.
Supplemental Schedule III is the responsibility of the Company's management
and is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic consolidated financial
statements. This schedule has 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 LLP
Milwaukee, Wisconsin,
February 2, 1995<PAGE>
<PAGE> 24
Schedule III - Condensed
Parent Company Financial Statements
<TABLE>
<CAPTION>
WICOR, INC.
(Parent Company Only)
Statement of Income
Year Ended December 31,
---------------------------------
1994 1993 1992
---------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Income:
Equity in income of subsidiaries
after dividends......................... $ 10,154 $ 9,356 $ 4,383
Cash dividends from subsidiaries.......... 23,000 21,500 19,000
Interest income........................... 373 267 451
--------- --------- ---------
33,527 31,123 23,834
--------- --------- ---------
Expenses:
Operating (Supplemental Note B)........... 455 1,942 1,333
Interest ................................. 163 259 63
--------- --------- ---------
618 2,201 1,396
--------- --------- ---------
Income Before Parent Company Income Taxes... 32,909 28,922 22,438
Income Taxes................................ (265) (391) (326)
--------- --------- ---------
Income Before Cumulative Effects of
Accounting Changes........................ 33,174 29,313 22,764
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.................................. $ 33,174 $ 29,313 $ 14,799
========= ========= =========
</TABLE>
The accompanying notes are an integral part of this statement.<PAGE>
<PAGE> 25
Schedule III - Condensed
Parent Company Financial Statements (continued)
<TABLE>
<CAPTION>
WICOR, INC.
(Parent Company Only)
Balance Sheet
As of December 31,
----------------------
(Thousands of Dollars) 1994 1993
Assets ----------------------
------
<S> <C> <C>
Current Assets:
Cash and cash equivalents............................. $ 13,076 $ 7,105
Intercompany receivable, net (Supplemental Note A).... 2,039 2,162
Other................................................. 79 112
---------- ----------
15,194 9,379
---------- ----------
Investment in Subsidiaries, at equity................... 286,725 269,615
---------- ----------
Deferred Income Taxes .................................. 204 146
Deferred Charges and Other.............................. 491 591
---------- ----------
$ 302,614 $ 279,731
========== ==========
Liabilities and Capitalization
------------------------------
Current Liabilities:
Income taxes payable.................................. $ 4,423 $ 2,875
Other................................................. 99 353
---------- ----------
4,522 3,228
---------- ----------
Deferred Credits........................................ 254 (1,257)
---------- ----------
Capitalization:
ESOP loan guarantee (Supplemental Note C)............. 6,370 7,484
---------- ----------
Common equity:
Common stock, $1 par value, authorized 60,000,000
shares; outstanding 16,918,000 and 16,407,000
shares, respectively ............................. 16,918 16,407
Other paid-in-capital .............................. 180,000 166,710
Retained earnings .................................. 101,418 94,643
Unearned compensation (Supplemental Note C)......... (6,868) (7,484)
---------- ----------
Total common equity............................... 291,468 270,276
---------- ----------
$ 302,614 $ 279,731
========== ==========
</TABLE>
The accompanying notes are an intergral part of this statement.<PAGE>
<PAGE> 26
Schedule III - Condensed
Parent Company Financial Statements (continued)
<TABLE>
<CAPTION>
WICOR, INC.
(Parent Company Only)
Statement of Retained Earnings
Year Ended December 31,
---------------------------------
1994 1993 1992
---------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Balance - Beginning of Year................. $ 94,643 $ 90,102 $ 97,906
Add:
Net income.............................. 33,174 29,313 14,799
--------- --------- ---------
127,817 119,415 112,705
Deduct:
Cash dividends on common stock.......... 26,399 24,099 21,869
Other................................... - 673 734
--------- --------- ---------
Balance - End of Year ...................... $101,418 $ 94,643 $ 90,102
========= ========= =========
</TABLE>
The accompanying notes are an integral part of this statement.<PAGE>
<PAGE> 27
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) ---------------------------------
1994 1993 1992
---------------------------------
<S> <C> <C> <C>
Operations-
Net income ............................... $ 33,174 $ 29,313 $ 14,799
Adjustments to reconcile net income to
net cash flows:
Equity in (income) losses of
subsidiaries.......................... (10,154) (9,356) (4,383)
Cumulative effect of change in
accounting principles, net of income
tax benefit of $4,110................. - - 7,965
Change in deferred income taxes......... (58) (73) (73)
Change in intercompany receivables...... 123 (7,342) 4,285
Change in income taxes payable.......... 1,548 6,923 (3,445)
Change in other current assets.......... 33 98 (124)
Change in other current liabilities..... (254) 178 176
Change in other non-current assets and
liabilities........................... (843) (185) (578)
--------- --------- ---------
23,569 19,556 18,622
--------- --------- ---------
Investment Activities-
Investments in subsidiaries............... (5,000) (12,000) (15,000)
Acquisitions.............................. - - (3,202)
--------- --------- ---------
(5,000) (12,000) (18,202)
--------- --------- ---------
Financing Activities-
Issuance of common stock.................. 10,649 16,682 6,081
Dividends paid on common stock, less
amounts reinvested...................... (23,247) (21,450) (19,458)
--------- --------- ---------
(12,598) (4,768) (13,377)
--------- --------- ---------
Change in Cash and Cash Equivalents......... 5,971 2,788 (12,957)
Cash and Cash Equivalents at Beginning
of Year................................... 7,105 4,317 17,274
--------- --------- ---------
Cash and Cash Equivalents at End of Year.... $ 13,076 $ 7,105 $ 4,317
========= ========= =========
Supplemental Disclosure of Cash Flow Information
Cash paid (received) during the year for:
Interest paid............................. $ - $ 1 $ 36
Income taxes paid......................... (4,440) 2,805 (462)
</TABLE>
The accompanying notes are an integral part of this statement.<PAGE>
<PAGE> 28
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 1994, 1993 and 1992, the parent company allocated certain
administrative and operating expenses to the following subsidiaries using
an allocation method approved by the PSCW:
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Administrative and oper-
ating expenses allocated
to subsidiaries $2,452,000 $2,388,000 $2,103,000
========== ========== ==========
</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> 29
TABLE OF CONTENTS
TO EXHIBITS
3.1 WICOR, Inc. Restated Articles of Incorporation, as amended
(incorporated by reference)
3.2* Amendment to WICOR, Inc. By-laws, effective February 28, 1995
3.3* WICOR, Inc. By-laws, as amended
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
byreference)
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 and Savings Bank, M&I Marshall & Ilsley Bank and
Citibank, N.A., as Agent (incorporated by reference)
4.9 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)
4.10 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)<PAGE>
<PAGE> 30
4.11* Extension of Revolving Credit and Term Loan Agreements, effective March
29, 1994, among WICOR, Inc., Wisconsin Gas Company and Sta-Rite
Industries, Inc., respective, and Citibank, N.A., Firstar Bank
Milwaukee, N.A., Harris Trust & Savings Bank, M&I Marshall & Ilsley
and Citibank, N.A. as Agent
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. (incorporated
by references)
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 Long-Term Performance Plan (incorporated by reference)
10.8# Form of nonstatutory stock option agreement used in connection with the
WICOR, Inc. 1994 Long-Term Performance Plan (incorporated by reference)
10.9# Form of restricted stock agreement used in connection with the WICOR,
Inc. 1994 Long-Term Performance Plan (incorporated by reference)
10.10*# WICOR, Inc. 1995 Officers' Incentive Compensation Plan
10.11# Wisconsin Gas Company Principal Officers' Supplemental Retirement
Income Program (incorporated by reference)
10.12*# Wisconsin Gas Company 1995 Officers' Incentive Compensation Plan
10.13# Wisconsin Gas Company Officers' Medical Expense Reimbursement Plan
(incorporated by reference)
10.14# Wisconsin Gas Company Group Travel Accident Plan (incorporated by
reference)
10.15# Form of Deferred Compensation Agreements between Wisconsin Gas Company
and certain of its executive officers (incorporated by reference)
10.16# Sta-Rite Industries Officers' Supplemental Retirement Income Program
(incorporated by reference)<PAGE>
<PAGE> 31
10.17*# Sta-Rite Industries, Inc. 1995 Officers' Incentive Compensation Plan
10.18#Sta-Rite Industries, Inc. Group Travel Accident Plan
(incorporated by reference)
10.19# WICOR, Inc. Retirement Plan for Directors (incorporated by reference)
13* Financial Review" portion of the WICOR, Inc. 1994 Annual Report to
Shareholders
21* Subsidiaries of WICOR, Inc
23* Consent of independent public accountants
27* Financial Data Schedule
99* WICOR, Inc. proxy statement dated March 10, 1995
* Indicates document filed herewith.
# Indicates a plan under which compensation is paid or payable to directors or
executive officers of the Company.<PAGE>
<PAGE>
<PAGE> 1
Exhibit 3.2
WICOR, Inc.
Amendment to By-Laws
Effective February 28, 1995
RESOLVED, that the second sentence of Section 3.01 of the Corporation's By-
Laws be, and it hereby is, amended to read as follows:
"The number of directors of the corporation shall be
ten (10), divided into three classes of three (3,
three (3) and four (4) directors, respectively, and
designated as Class I, Class II and Class III,
respectively."
FURTHER RESOLVED, that the foregoing resolution shall be effective February
28, 1995.
<PAGE>
<PAGE>
<PAGE> 1
EXHIBIT 3.3
BY-LAWS
OF
WICOR, INC.
(a Wisconsin corporation)
Effective August 1, 1993<PAGE>
<PAGE> 2
BY-LAWS
OF
WICOR, INC.
(a Wisconsin corporation)
Effective August 1, 1993
ARTICLE I. OFFICES
A. Principal and Business Offices
The corporation may have such principal and other business offices,
either within or without the State of Wisconsin, as the Board of Directors
may designate or as the business of the corporation may require from time to
time.
B. Registered Office
The registered office of the corporation required by the Wisconsin
Business Corporation Law to be maintained in the State of Wisconsin may be,
but need not be, identical with the principal office in the State of
Wisconsin, and the address of the registered office may be changed from time
to time by the Board of Directors or by the registered agent. The business
office of the registered agent of the corporation shall be identical to such
registered office.
ARTICLE II. SHAREHOLDERS
A. Annual Meeting
The annual meeting of the shareholders shall be held on the fourth
Thursday in April of each year at 11:00 a.m. local time, or at such other
time and date within thirty days before or after such date as may be fixed by
or under the authority of the Board of Directors, for the purpose of electing
directors and for the transaction of such other business as may come before
the meeting. If the day fixed for the annual meeting shall be a legal
holiday in the State of Wisconsin, such meeting shall be held on the next
succeeding business day.
B. Special Meetings
Special meetings of the shareholders, for any purpose or purposes,
unless otherwise prescribed by the Wisconsin Business Corporation Law, may be
called by the Board of Directors, the Chairman, the Vice Chairman or the
President. The corporation shall call a special meeting of shareholders in
the event that the holders of at least 10% of all of the votes entitled to be
cast on any issue proposed to be considered at the proposed special meeting
sign, date and deliver to the corporation one or more written demands for the
meeting describing one or more purposes for which it is to be held. The
corporation shall give notice of such a special meeting within thirty (30)
days after the date that the demand is delivered to the corporation.
C. Place of Meeting
The Board of Directors may designate any place, either within or
without the State of Wisconsin, as the place of meeting for any annual or
special meeting of shareholders. If no designation is made, the place of
meeting shall be the principal office of the corporation. Any meeting may be
adjourned to reconvene at any place designated by vote of the shares
represented there at.<PAGE>
<PAGE> 3
D. Notice of Meeting
Written notice stating the date, time and place of any meeting of
shareholders and, in case of a special meeting, the purpose or purposes for
which the meeting is called, shall be delivered not less than ten (10) days
nor more than sixty (60) days before the date of the meeting (unless a
different time is provided by the Wisconsin Business Corporation Law or the
articles of incorporation), either personally or by mail, by or at the
direction of the Chairman, the Vice Chairman, the President or the Secretary,
to each shareholder of record entitled to vote at such meeting and to such
other persons as required by the Wisconsin Business Corporation Law. If
mailed, such notice shall be deemed to be effective when deposited in the
United States mail, addressed to the shareholder at his or her address as it
appears on the stock record books of the corporation, with postage thereon
prepaid. If an annual or special meeting of shareholders is adjourned to a
different date, time or place, the corporation shall not be required to give
notice of the new date, time or place if the new date, time or place is
announced at the meeting before adjournment; provided, however, that if a new
record date for an adjourned meeting is or must be fixed, the corporation
shall give notice of the adjourned meeting to persons who are shareholders as
of the new record date.
E. Waiver of Notice
A shareholder may waive any notice required by the Wisconsin Business
Corporation Law, the articles of incorporation or these by-laws before or
after the date and time stated in the notice. The waiver shall be in writing
and signed by the shareholder entitled to the notice, contain the same
information that would have been required in the notice under applicable
provisions of the Wisconsin Business Corporation Law (except that the time
and place of meeting need not be stated) and be delivered to the corporation
for inclusion in the corporate records. A shareholder's attendance at a
meeting, in person or by proxy, waives objection to all of the following:
(a) lack of notice or defective notice of the meeting, unless the shareholder
at the beginning of the meeting or promptly upon arrival objects to holding
the meeting or transacting business at the meeting; and (b) consideration of
a particular matter at the meeting that is not within the purpose described
in the meeting notice, unless the shareholder objects to considering the
matter when it is presented.
F. Fixing of Record Date
The Board of Directors may fix in advance a date as the record date for
the purpose of determining shareholders entitled to notice of and to vote at
any meeting of shareholders, shareholders entitled to demand a special
meeting as contemplated by Section 2.2 hereof, shareholders entitled to take
any other action, or shareholders for any other purpose. Such record date
shall not be more than seventy (70) days prior to the date on which the
particular action, requiring such determination of shareholders, is to be
taken. If no record date is fixed by the Board of Directors or by the
Wisconsin Business Corporation Law for the determination of shareholders
entitled to notice of and to vote at a meeting of shareholders, the record
date shall be the close of business on the day before the first notice is
given to shareholders. If no record date is fixed by the Board of Directors
or by the Wisconsin Business Corporation Law for the determination of
shareholders entitled to demand a special meeting as contemplated in Section
2.2 hereof, the record date shall be the date that the first shareholder
signs the demand. Except as provided by the Wisconsin Business Corporation
Law for a court-ordered adjournment, a determination of shareholders entitled
to notice of and to vote at a meeting of shareholders is effective for any
adjournment of such meeting unless the Board of Directors fixes a new record
date, which it shall do if the meeting is adjourned to a date more than one
hundred twenty (120) days after the date fixed for the original meeting. The
record date for determining shareholders entitled to a distribution<PAGE>
<PAGE> 4
(other than a distribution involving a purchase, redemption or other
acquisition of the corporation's shares) or a share dividend is the date on
which the Board of Directors authorized the distribution or share dividend,
as the case may be, unless the Board of Directors fixes a different record
date.
G. Shareholders' List for Meetings
After a record date for a special or annual meeting of shareholders has
been fixed, the corporation shall prepare a list of the names of all of the
shareholders entitled to notice of the meeting. The list shall be arranged
by class or series of shares, if any, and show the address of and number of
shares held by each shareholder. Such list shall be available for inspection
by any shareholder, beginning two (2) business days after notice of the
meeting is given for which the list was prepared and continuing to the date
of the meeting, at the corporation's principal office or at a place
identified in the meeting notice in the city where the meeting will be held.
A shareholder or his or her agent may, on written demand, inspect and,
subject to the limitations imposed by the Wisconsin Business Corporation Law,
copy the list, during regular business hours and at his or her expense,
during the period that it is available for inspection pursuant to this
Section 2.7. The corporation shall make the shareholders' list available at
the meeting and any shareholder or his or her agent or attorney may inspect
the list at any time during the meeting or any adjournment thereof. Refusal
or failure to prepare or make available the shareholders' list shall not
affect the validity of any action taken at a meeting of shareholders.
H. Quorum and Voting Requirements
Shares entitled to vote as a separate voting group may take action on a
matter at a meeting only if a quorum of those shares exists with respect to
that matter. If the corporation has only one class of common stock
outstanding, such class shall constitute a separate voting group for purposes
of this Section 2.8. Except as otherwise provided in the articles of
incorporation, any by-law adopted under authority granted in the articles of
incorporation, or the Wisconsin Business Corporation Law, a majority of the
votes entitled to be cast on the matter shall constitute a quorum of the
voting group for action on that matter. Once a share is represented for any
purpose at a meeting, other than for the purpose of objecting to holding the
meeting or transacting business at the meeting, it is considered present for
purposes of determining whether a quorum exists for the remainder of the
meeting and for any adjournment of that meeting unless a new record date is
or must be set for the adjourned meeting. If a quorum exists, except in the
case of the election of directors, action on a matter shall be approved if
the votes cast within the voting group favoring the action exceed the votes
cast opposing the action, unless the articles of incorporation, any by-law
adopted under authority granted in the articles of incorporation, or the
Wisconsin Business Corporation Law requires a greater number of affirmative
votes. Unless otherwise provided in the articles of incorporation, directors
shall be elected by a plurality of the votes cast by the shares entitled to
vote in the election of directors at a meeting at which a quorum is present.
For purposes of this Section 2.8, "plurality" means that the individuals with
the largest number of votes are elected as directors up to the maximum number
of directors to be chosen at the meeting. Though less than a quorum of the
outstanding votes of a voting group are represented at a meeting, a majority
of the votes so represented may adjourn the meeting from time to time without
further notice. At such adjourned meeting at which a quorum shall be present
or represented, any business may be transacted which might have been
transacted at the meeting as originally noticed.
I. Conduct of Meeting
The Chairman, and in his or her absence, the Vice Chairman, and in his
or her absence, the President, and in his or her absence, a Vice President in
the order provided under Section 4.10 hereof, and in their absence, any
person chosen by the shareholders present shall call the meeting of the
shareholders to order and shall act as chairman of the meeting, and the
Secretary of the corporation shall act as secretary of all meetings of<PAGE>
<PAGE> 5
the shareholders, but, in the absence of the Secretary, the presiding officer
may appoint any other person to act as secretary of the meeting.
J. Proxies
At all meetings of shareholders, a shareholder may vote his or her
shares in person or by proxy. A shareholder may appoint a proxy to vote or
otherwise act for the shareholder by signing an appointment form, either
personally or by his or her attorney-in-fact. An appointment of a proxy is
effective when received by the Secretary or other officer or agent of the
corporation authorized to tabulate votes. An appointment is valid for eleven
(11) months from the date of its signing unless a different period is
expressly provided in the appointment form. The presence of a shareholder
who has filed a proxy shall not of itself constitute revocation. The Board
of Directors shall have the power and authority to make rules establishing
presumptions as to the validity and sufficiency of proxies.
K. Voting of Shares
Except as provided in the articles of incorporation or in the Wisconsin
Business Corporation Law, each outstanding share, regardless of class, is
entitled to one vote on each matter voted on at a meeting of shareholders.
L. Action without Meeting
Any action required or permitted by the articles of incorporation or
these by-laws or any provision of the Wisconsin Business Corporation Law to
be taken at a meeting of the shareholders may be taken without a meeting and
without action by the Board of Directors if a written consent or consents,
describing the action so taken, is signed by all of the shareholders entitled
to vote with respect to the subject matter thereof and delivered to the
corporation for inclusion in the corporate records.
M. Acceptance of Instruments Showing Shareholder Action
If the name signed on a vote, consent, waiver or proxy appointment
corresponds to the name of a shareholder, the corporation, if acting in good
faith, may accept the vote, consent, waiver or proxy appointment and give it
effect as the act of a shareholder. If the name signed on a vote, consent,
waiver or proxy appointment does not correspond to the name of a shareholder,
the corporation, if acting in good faith, may accept the vote, consent,
waiver or proxy appointment and give it effect as the act of the shareholder
if any of the following apply:
(1) The shareholder is an entity and the name signed purports to be
that of an officer or agent of the entity.
(2) The name purports to be that of a personal representative,
administrator, executor, guardian or conservator representing the shareholder
and, if the corporation requests, evidence of fiduciary status acceptable to
the corporation is presented with respect to the vote, consent, waiver or
proxy appointment.
(3) The name signed purports to be that of a receiver or trustee in
bankruptcy of the shareholder and, if the corporation requests, evidence of
this status acceptable to the corporation is presented with respect to the
vote, consent, waiver or proxy appointment.
(4) The name signed purports to be that of a pledgee, beneficial
owner, or attorney-in-fact of the shareholder and, if the corporation
requests, evidence acceptable to the corporation of the signatory's authority
to sign for the shareholder is presented with respect to the vote, consent,
waiver or proxy appointment.<PAGE>
<PAGE> 6
(5) Two or more persons are the shareholders as co-tenants or
fiduciaries and the name signed purports to be the name of at least one of
the co-owners and the person signing appears to be acting on behalf of all
co-owners.
The corporation may reject a vote, consent, waiver or proxy appointment
if the Secretary or other officer or agent of the corporation who is
authorized to tabulate votes, acting in good faith, has reasonable basis for
doubt about the validity of the signature on it or about the signatory's
authority to sign for the shareholder.
ARTICLE III BOARD OF DIRECTORS
A. General Powers, Classification and Number
All corporate powers shall be exercised by or under the authority of,
and the business affairs of the corporation managed under the direction of,
the Board of Directors. The number of directors of the corporation shall be
eleven (11), divided into three classes of four (4), four (4), and three (3)
directors, respectively, and designated as Class I, Class II and Class III,
respectively. At each annual meeting of shareholders the successors to the
class of directors whose terms shall expire at the time of such annual
meeting shall be elected to hold office until the third succeeding annual
meeting of shareholders and until their successors are elected and qualified.
B. Tenure and Qualifications
Each director shall hold office until the next annual meeting of
shareholders in the year in which such director's term expires and until his
or her successor shall have been elected and, if necessary, qualified, or
until there is a decrease in the number of directors which takes effect after
the expiration of his or her term, or until his or her prior retirement,
death, resignation or removal. The retirement or resignation of a director
who is an officer of this corporation or an affiliated corporation, but not
also the chief executive officer of this corporation, shall take effect at
the time he or she ceases to hold his or her position as an officer of this
corporation or an affiliated corporation. Any other director shall resign
from the Board of Directors effective as of the annual meeting of
shareholders next following the date on which he or she attains the age of
seventy (70) years. No person shall be eligible for election as a director
after he or she shall have attained the age of seventy (70) years. A
director may be removed from office only as provided in the articles of
incorporation at a meeting of the shareholders called for the purpose of
removing the director, and the meeting notice shall state that the purpose,
or one of the purposes, of the meeting is removal of the director. A
director may resign at any time by delivering written notice which complies
with the Wisconsin Business Corporation Law to the Board of Directors, to the
Chairman or the President (in his or her capacity as chairperson of the Board
of Directors) or to the corporation. A director's resignation is effective
when the notice is delivered unless the notice specifies a later effective
date. Directors need not be residents of the State of Wisconsin or
shareholders of the corporation. No other restrictions, limitations or
qualifications may be imposed on individuals for service as a director.
C. Regular Meetings
A regular meeting of the Board of Directors shall be held without other
notice than this by-law immediately after the annual meeting of shareholders
and each adjourned session thereof. The place of such regular meeting shall
be the principal business office of the corporation in the State of
Wisconsin, or such other suitable place as may be announced at such<PAGE>
<PAGE> 7
meeting of shareholders. The Board of Directors may provide, by resolution,
the date, time and place, either within or without the State of Wisconsin,
for the holding of additional regular meetings of the Board of Directors
without other notice than such resolution.
D. Special Meetings
Special meetings of the Board of Directors may be called by or at the
request of the Chairman, the Vice Chairman, the President, Secretary or any
two (2) directors. The Chairman, the Vice Chairman, the President or
Secretary may fix any place, either within or without the State of Wisconsin,
as the place for holding any special meeting of the Board of Directors, and
if no other place is fixed the place of the meeting shall be the principal
business office of the corporation in the State of Wisconsin.
E. Notice; Waiver
Notice of each meeting of the Board of Directors (unless otherwise
provided in or pursuant to Section 3.3) shall be given by written notice
delivered or communicated in person, by telegraph, teletype, facsimile or
other form of wire or wireless communication, or by mail or private carrier,
to each director at his business address or at such other address as such
director shall have designated in writing filed with the Secretary, in each
case not less than forty-eight (48) hours prior to the meeting. The notice
need not describe the purpose of the meeting of the Board of Directors or the
business to be transacted at such meeting. If mailed, such notice shall be
deemed to be effective when deposited in the United States mail so addressed,
with postage thereon prepaid. If notice is given by telegram, such notice
shall be deemed to be effective when the telegram is delivered to the
telegraph company. If notice is given by private carrier, such notice shall
be deemed to be effective when delivered to the private carrier. Whenever
any notice whatever is required to be given to any director of the
corporation under the articles of incorporation or these by-laws or any
provision of the Wisconsin Business Corporation Law, a waiver thereof in
writing, signed at any time, whether before or after the date and time of
meeting, by the director entitled to such notice shall be deemed equivalent
to the giving of such notice. The corporation shall retain any such waiver
as part of the permanent corporate records. A director's attendance at or
participation in a meeting waives any required notice to him or her of the
meeting unless the director at the beginning of the meeting or promptly upon
his or her arrival objects to holding the meeting or transacting business at
the meeting and does not thereafter vote for or assent to action taken at the
meeting.
F. Quorum
Except as otherwise provided by the Wisconsin Business Corporation Law
or by the articles of incorporation or these by-laws, a majority of the
number of directors specified in Section 3.1 of these by-laws shall
constitute a quorum for the transaction of business at any meeting of the
Board of Directors. Except as otherwise provided by the Wisconsin Business
Corporation Law or by the articles of incorporation or by these by-laws, a
quorum of any committee of the Board of Directors created pursuant to Section
3.12 hereof shall consist of a majority of the number of directors appointed
to serve on the committee. A majority of the directors present (though less
than such quorum) may adjourn any meeting of the Board of Directors or any
committee thereof, as the case may be, from time to time without further
notice.<PAGE>
<PAGE> 8
G. Manner of Acting
The affirmative vote of a majority of the directors present at a
meeting of the Board of Directors or a committee thereof at which a quorum is
present shall be the act of the Board of Directors or such committee, as the
case may be, unless the Wisconsin Business Corporation Law, the articles of
incorporation or these by-laws require the vote of a greater number of
directors.
H. Conduct of Meetings
The Chairman, and in his or her absence, the Vice Chairman, and in his
or her absence, the President, and in his or her absence, a Vice President in
the order provided under Section 4.10, and in their absence, any director
chosen by the directors present, shall call meetings of the Board of
Directors to order and shall act as chairman of the meeting. The Secretary
of the corporation shall act as secretary of all meetings of the Board of
Directors but in the absence of the Secretary, the presiding officer may
appoint any other person present to act as secretary of the meeting. Minutes
of any regular or special meeting of the Board of Directors shall be prepared
and distributed to each director.
I. Vacancies
Any vacancies occurring in the Board of Directors, including a vacancy
created by an increase in the number of directors, shall be filled only as
provided in the articles of incorporation. A vacancy that will occur at a
specific later date, because of a resignation effective at a later date or
otherwise, may be filled before the vacancy occurs, but the new director may
not take office until the vacancy occurs.
J. Compensation
The Board of Directors, irrespective of any personal interest of any of
its members, may establish reasonable compensation of all directors for
services to the corporation as directors, officers or otherwise, or may
delegate such authority to an appropriate committee. The Board of Directors
also shall have authority to provide for or delegate authority to an
appropriate committee to provide for reasonable pensions, disability or death
benefits, and other benefits or payments, to directors, officers and
employees and to their estates, families, dependents or beneficiaries on
account of prior services rendered by such directors, officers and employees
to the corporation.
K. Presumption of Assent
A director who is present and is announced as present at a meeting of
the Board of Directors or any committee thereof created in accordance with
Section 3.12 hereof, when corporate action is taken, assents to the action
taken unless any of the following occurs: (a) the director objects at the
beginning of the meeting or promptly upon his or her arrival to holding the
meeting or transacting business at the meeting; (b) the director dissents or
abstains from an action taken and minutes of the meeting are prepared that
show the director's dissent or abstention from the action taken; (c) the
director delivers written notice that complies with the Wisconsin Business
Corporation Law of his or her dissent or abstention to the presiding officer
of the meeting before its adjournment or to the corporation immediately after
adjournment of the meeting; or (d) the director dissents or abstains from an
action taken, minutes of the meeting are prepared
that fail to show the director's dissent or abstention from the action taken,
and the director delivers to the corporation a written notice of that failure
that complies with the Wisconsin Business Corporation Law promptly after
receiving the minutes. Such right of dissent or abstention shall not apply
to a director who votes in favor of the action taken.<PAGE>
<PAGE> 9
L. Committees
The Board of Directors by resolution adopted by the affirmative vote of
a majority of all of the directors then in office may create one or more
committees, appoint members of the Board of Directors to serve on the
committees and designate other members of the Board of Directors to serve as
alternates. Each committee shall have two (2) or more members who shall,
unless otherwise provided by the Board of Directors, serve at the pleasure of
the Board of Directors. A committee may be authorized to exercise the
authority of the Board of Directors, except that a committee may not do any
of the following: (a) authorize distributions; (b) approve or propose to
shareholders action that the Wisconsin Business Corporation Law requires to
be approved by shareholders; (c) fill vacancies on the Board of Directors or,
unless the Board of Directors provides by resolution that vacancies on a
committee shall be filled by the affirmative vote of the remaining committee
members, on any Board committee; (d) amend the corporation's articles of
incorporation; (e) adopt, amend or repeal by-laws; (f) approve a plan of
merger not requiring shareholder approval; (g) authorize or approve
reacquisition of shares, except according to a formula or method prescribed
by the Board of Directors; and (h) authorize or approve the issuance or sale
or contract for sale of shares, or determine the designation and relative
rights, preferences and limitations of a class or series of shares, except
that the Board of Directors may authorize a committee to do so within limits
prescribed by the Board of Directors. Unless otherwise provided by the Board
of Directors in creating the committee, a committee may employ counsel,
accountants and other consultants to assist it in the exercise of its
authority.
M. Alternate Members of Committees
The Board of Directors may appoint annually and from time to time, as
alternate members of any committee of the Board of Directors, directors to
serve whenever designated by the committee or by the Chairman, the Vice
Chairman or the President to take the place of absent members, or to fill
vacancies on such committee until the next meeting of the Board of Directors.
An alternate member of any committee so designated to serve shall receive
compensation for such service as fixed by the Board of Directors.
N. Telephonic Meetings
Except as herein provided and notwithstanding any place set forth in
the notice of the meeting or these by-laws, members of the Board of Directors
(and any committees thereof created pursuant to Section 3.12 hereof) may
participate in regular or special meetings by, or through the use of, any
means of communication by which all participants may simultaneously hear each
other, such as by conference telephone. If a meeting is conducted by such
means, then at the commencement of such meeting the presiding officer shall
inform the participating directors that a meeting is taking place at which
official business may be transacted. Any participant in a meeting by such
means shall be deemed present in person at such meeting. Notwithstanding the
foregoing, no action may be taken at any meeting held by such means on any
particular matter which the presiding officer determines, in his or her sole
discretion, to be inappropriate under the circumstances for action at a
meeting held by such means. Such determination shall be made and announced
in advance of such meeting.
O. Action Without Meeting
Any action required or permitted by the Wisconsin Business Corporation
Law to be taken at a meeting of the Board of Directors or a committee thereof
created pursuant to Section 3.12 hereof may be taken without a meeting if the
action is taken by all members of the Board or of the committee. The action
shall be evidenced by one or more written consents describing the action
taken, signed by each director or committee member and retained by<PAGE>
<PAGE> 10
the corporation. Such action shall be effective when the last director or
committee member signs the consent, unless the consent specifies a different
effective date.
ARTICLE IV OFFICERS
A. Number
The principal officers of the corporation shall be a President, the
number of Vice Presidents as authorized from time to time by the Board of
Directors, a Secretary, and a Treasurer, each of whom shall be elected by the
Board of Directors. A Chairman, a Vice Chairman and such other officers and
assistant officers as may be deemed necessary may be elected or appointed by
the Board of Directors. The Board of Directors may also authorize any duly
appointed officer to appoint one or more officers or assistant officers. Any
two (2) or more offices may be held by the same person.
B. Election and Term of Office
The officers of the corporation to be elected by the Board of Directors
shall be elected annually by the Board of Directors at the first meeting of
the Board of Directors held after each annual meeting of the shareholders.
If the election of officers shall not be held at such meeting, such election
shall be held as soon thereafter as is practicable. Each officer shall hold
office until his or her successor shall have been duly elected or until his
or her prior death, resignation or removal.
C. Removal
The Board of Directors may remove any officer and, unless restricted by
the Board of Directors or these by-laws, an officer may remove any officer or
assistant officer appointed by that officer, at any time, with or without
cause and notwithstanding the contract rights, if any, of the officer
removed. The appointment of an officer does not of itself create contract
rights.
D. Resignation
An officer may resign at any time by delivering notice to the
corporation that complies with the Wisconsin Business Corporation Law. The
resignation shall be effective when the notice is delivered, unless the
notice specifies a later effective date and the corporation accepts the later
effective date.
E. Vacancies
A vacancy in any principal office because of death, resignation,
removal, disqualification or otherwise, shall be filled by the Board of
Directors for the unexpired portion of the term. If a resignation of an
officer is effective at a later date as contemplated by Section 4.4 hereof,
the Board of
Directors may fill the pending vacancy before the effective date if the Board
provides that the successor may not take office until the effective date.
F. Chief Executive Officer
The Board of Directors shall from time to time designate the Chairman,
if any, the Vice Chairman, if any, or the President as the Chief Executive
Officer of the corporation. The President shall be the Chief Executive
Officer when the offices of Chairman and Vice Chairman are vacant, or when
the Board of Directors has not designated the Chairman, if any, or the Vice
Chairman, if any, as Chief Executive Officer. Subject to the control of the
Board of Directors, the Chief Executive Officer shall in general supervise
and control all of the business and affairs of the corporation and<PAGE>
<PAGE> 11
shall perform all duties incident to the office of Chief Executive Officer
and such other duties as may be prescribed by the Board of Directors from
time to time.
G. Chairman
The Chairman, if any, shall, when present, preside at all meetings of
the shareholders and the Board of Directors. He or she shall have authority,
subject to such rules as may be prescribed by the Board of Directors, to
appoint such agents and employees of the corporation as he or she shall deem
necessary, to prescribe their powers, duties and compensation, and to
delegate authority to them. Such agents and employees shall hold office at
the discretion of the Chairman. He or she shall have authority to sign,
execute and acknowledge, on behalf of the corporation, all deeds, mortgages,
bonds, stock certificates, contracts, leases, reports and all other documents
or instruments necessary or proper to be executed in the course of the
corporation's regular business, or which shall be authorized by resolution of
the Board of Directors; and, except as otherwise provided by law or the Board
of Directors, he or she may authorize any other officer or agent of the
corporation to sign, execute and acknowledge such documents or instruments in
his or her place and stead. In general, he or she shall perform all duties
incident to the office of Chairman and such other duties as may be prescribed
by the Board of Directors from time to time.
H. Vice Chairman
The Vice Chairman, if any, shall have such authority and
responsibilities as may be prescribed by the Board of Directors from time to
time. In the absence of the Chairman, or in the event of the Chairman's
death or inability to act, or in the event for any reason it shall be
impracticable for the Chairman to act personally, the Vice Chairman shall
perform the duties of the Chairman, and when so acting, shall have all the
powers of and be subject to all of the restrictions upon the Chairman. He or
she shall have authority, subject to such rules as may be prescribed by the
Board of Directors, to appoint such agents and employees of the corporation
as he or she shall deem necessary, to prescribe their powers, duties and
compensation, and to delegate authority to them. Such agents shall hold
office at the discretion of the Vice Chairman. He or she shall have
authority to sign, execute and acknowledge, on behalf of the corporation, all
deeds, mortgages, bonds, stock certificates, contracts, leases, reports and
all other documents or instruments necessary or proper to be executed in the
course of the corporation's regular business, or which shall be authorized by
resolution of the Board of Directors; and, except as otherwise provided by
law or the Board of Directors, he or she may authorize the President or other
officer or agent of the corporation to sign, execute and acknowledge such
documents or instruments in his or her place and stead. In general, he or
she shall perform all duties incident to the office of Vice Chairman and such
other duties as may be prescribed by the Chairman or the Board of Directors
from time to time.
I. President
The President shall have such authority and responsibility as may be
prescribed by the Board of Directors from time to time. In the absence of
the Vice Chairman, if any, or in the event of the Vice Chairman's death or
inability to act, or in the event for any reason it shall be impracticable
for the Vice Chairman to act personally, the President shall perform the
duties of the Vice Chairman, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the Vice Chairman. He or she
shall have authority, subject to such rules as may be prescribed by the Board
of Directors, to appoint such agents and employees of the corporation as he
or she shall deem necessary, to prescribe their powers, duties and
compensation, and to delegate authority to them. Such agents shall hold
office at the discretion of the President. He or she shall have authority to
sign, execute and acknowledge, on behalf of the corporation, all deeds,
mortgages, bonds, stock certificates, contracts, leases, reports and<PAGE>
<PAGE> 12
all other documents or instruments necessary or proper to be executed in the
course of the corporation's regular business, or which shall be authorized by
resolution of the Board of Directors; and, except as otherwise provided by
law or the Board of Directors, he or she may authorize any other officer or
agent of the corporation to sign, execute and acknowledge such documents or
instruments in his or her place and stead. In general, he or she shall
perform all duties incident to the office of President and such other duties
as may be prescribed by the Chairman, or Vice Chairman, if any, or the Board
of Directors from time to time.
J. The Vice Presidents
In the absence of the President, or in the event of the President's
death, inability or refusal to act, or in the event for any reason it shall
be impracticable for the President to act personally, the Vice President (or
in the event there be more than one Vice President, the Vice Presidents in
the order designated by the Board of Directors, or in the absence of any
designation, then in the order of their election) shall perform the duties of
the President, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the President. Any Vice President may
sign, with the Secretary or Assistant Secretary, certificates for shares of
the corporation; and shall perform such other duties and have such authority
as from time to time may be delegated or assigned to him or her by the
Chairman or Vice Chairman, if any, by the President or the Board of
Directors. The execution of any instrument of the corporation by any Vice
President shall be conclusive evidence, as to third parties, of his or her
authority to act in the stead of the Chairman, the Vice Chairman or the
President.
K. The Secretary
The Secretary shall: (a) keep minutes of the meetings of the
shareholders and of the Board of Directors (and of committees thereof) in one
or more books provided for that purpose (including records of actions taken
by the shareholders or the Board of Directors (or committees thereof) without
a meeting); (b) see that all notices are duly given in accordance with the
provisions of these by-laws or as required by the Wisconsin Business
Corporation Law; (c) be custodian of the corporate records and of the seal of
the corporation and see that the seal of the corporation is affixed to all
documents the execution of which on behalf of the corporation under its seal
is duly authorized; (d) maintain a record of the shareholders of the
corporation, in a form that permits preparation of a list of the names and
addresses of all shareholders, by class or series of shares and showing the
number and class or series of shares held by each shareholder; (e) sign with
the Chairman, the Vice Chairman, the President or a Vice President,
certificates for shares of the corporation, the issuance of which shall have
been authorized by resolution of the Board of Directors; (f) have general
charge of the stock transfer books of the corporation; and (g) in general
perform all duties incident to the office of Secretary and have such other
duties and exercise such authority as from time to time may be delegated or
assigned by the Chairman, the Vice Chairman, the President or the Board of
Directors.
L. The Treasurer
The Treasurer shall: (a) have charge and custody of and be responsible
for all funds and securities of the corporation; (b) maintain appropriate
accounting records; (c) receive and give receipts for moneys due and payable
to the corporation from any source whatsoever, and deposit all such moneys in
the name of the corporation in such banks, trust companies or other
depositaries as shall be selected in accordance with the provisions of
Section 5.4; and (d) in general perform all of the duties incident to the
office of Treasurer and have such other duties and exercise such other
authority as from time to time may be delegated or assigned by the Chairman,
the Vice Chairman, the President or the Board of Directors. If required by
the Board of Directors, the Treasurer shall give a bond for the<PAGE>
<PAGE> 13
faithful discharge of his or her duties in such sum and with such surety or
sureties as the Board of Directors shall determine.
M. Assistant Secretaries and Assistant Treasurers
There shall be such number of Assistant Secretaries and Assistant
Treasurers as the Board of Directors may from time to time authorize. The
Assistant Secretaries may sign with the Chairman, the Vice Chairman, the
President or a Vice President certificates for shares of the corporation the
issuance of which shall have been authorized by a resolution of the Board of
Directors. The Assistant Treasurers shall respectively, if required by the
Board of Directors, give bonds for the faithful discharge of their duties in
such sums and with such sureties as the Board of Directors shall determine.
The Assistant Secretaries and Assistant Treasurers, in general, shall perform
such duties and have such authority as shall from time to time be delegated
or assigned to them by the Secretary or the Treasurer, respectively, or by
the Chairman, the Vice Chairman, the President or the Board of Directors.
N. Other Assistants and Acting Officers
The Board of Directors shall have the power to appoint, or to authorize
any duly appointed officer of the corporation to appoint, any person to act
as assistant to any officer, or as agent for the corporation in his or her
stead, or to perform the duties of such officer whenever for any reason it is
impracticable for such officer to act personally, and such assistant or
acting officer or other agent so appointed by the Board of Directors or an
authorized officer shall have the power to perform all the duties of the
office to which he or she is so appointed to be an assistant, or as to which
he or she is so appointed to act, except as such power may be otherwise
defined or restricted by the Board of Directors or the appointing officer.
ARTICLE V CONTRACTS, LOANS, CHECKS
AND DEPOSITS; SPECIAL CORPORATE ACTS
A. Contracts
The Board of Directors may authorize any officer or officers, agent or
agents, to enter into any contract or execute or deliver any instrument in
the name of and on behalf of the corporation, and such authorization may be
general or confined to specific instances. In the absence of other
designation, all deeds, mortgages and instruments of assignment or pledge
made by the corporation shall be executed in the name of the corporation by
the Chairman, the Vice Chairman, the President or one of the Vice Presidents
and by the Secretary, an Assistant Secretary, the Treasurer or an Assistant
Treasurer; the Secretary or an Assistant Secretary, when necessary or
required, shall affix the corporate seal, if any, thereto; and when so
executed no other party to such instrument or any third party shall be
required to make any inquiry into the authority of the signing officer or
officers.
B. Loans
No indebtedness for borrowed money shall be contracted on behalf of the
corporation and no evidences of such indebtedness shall be issued in its name
unless authorized by or under the authority of a resolution of the Board of
Directors. Such authorization may be general or confined to specific
instances.<PAGE>
<PAGE> 14
C. Checks, Drafts, etc
All checks, drafts or other orders for the payment of money, notes or
other evidences of indebtedness issued in the name of the corporation, shall
be signed by such officer or officers, agent or agents of the corporation and
in such manner as shall from time to time be determined by or under the
authority of a resolution of the Board of Directors.
D. Deposits
All funds of the corporation not otherwise employed shall be deposited
from time to time to the credit of the corporation in such banks, trust
companies or other depositaries as may be selected by or under the authority
of a resolution of the Board of Directors.
E. Voting of Securities Owned by this Corporation
Subject always to the specific directions of the Board of Directors,
(a) any shares or other securities issued by any other corporation and owned
or controlled by this corporation may be voted at any meeting of security
holders of such other corporation by the Chairman of this corporation if he
or she be present, or in his or her absence, by the Vice Chairman of this
corporation if he or she be present, or in his or her absence, by the
President of this corporation if he or she be present, or in his or her
absence by any Vice President of this corporation who may be present, and (b)
whenever, in the judgment of the Chairman, or in his or her absence, the Vice
Chairman, or in his or her absence, the President, or in his or her absence,
any Vice President, it is desirable for this corporation to execute a proxy
or written consent in respect to any shares or other securities issued by any
other corporation and owned by this corporation, such proxy or consent shall
be executed in the name of this corporation by the Chairman, the Vice
Chairman, the President or one of the Vice Presidents of this corporation,
without necessity of any authoriza-tion by the Board of Directors, affixation
of corporate seal, if any, or countersignature or attestation by another
officer. Any person or persons designated in the manner above stated as the
proxy or proxies of this corporation shall have full right, power and
authority to vote the shares or other securities issued by such other
corporation and owned by this corporation the same as such shares or other
securities might be voted by this corporation.
ARTICLE VI CERTIFICATES FOR SHARES; TRANSFER OF SHARES
A. Certificates for Shares
Certificates representing shares of the corporation shall be in such
form, consistent with the Wisconsin Business Corporation Law, as shall be
determined by the Board of Directors. Such certificates shall be signed by
the Chairman, the Vice Chairman, the President or a Vice President and by the
Secretary or an Assistant Secretary. All certificates for shares shall be
consecutively numbered or otherwise identified. The name and address of the
person to whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered on the stock transfer books of the
corporation. All certificates surrendered to the corporation for transfer
shall be cancelled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
cancelled, except as provided in Section 6.6.
B. Facsimile Signatures and Seal
The seal of the corporation on any certificates for shares may be a
facsimile. The signature of the Chairman, the Vice Chairman, the President
or Vice President and the Secretary or Assistant Secretary upon a certificate
may be facsimiles if the certificate is manually signed on behalf<PAGE>
<PAGE> 15
of a transfer agent, or a registrar, other than the corporation itself or an
employee of the corporation.
C. Signature by Former Officers
The validity of a share certificate is not affected if a person who
signed the certificate (either manually or in facsimile) no longer holds
office when the certificate is issued.
D. Transfer of Shares
Prior to due presentment of a certificate for shares for registration
of transfer the corporation may treat the registered owner of such shares as
the person exclusively entitled to vote, to receive notifications and
otherwise to have and exercise all the rights and power of an owner. Where a
certificate for shares is presented to the corporation with a request to
register for transfer, the corporation shall not be liable to the owner or
any other person suffering loss as a result of such registration of transfer
if (a) there were on or with the certificate the necessary endorsements, and
(b) the corporation had no duty to inquire into adverse claims or has
discharged any such duty. The corporation may require reasonable assurance
that such endorsements are genuine and effective and compliance with such
other regulations as may be prescribed by or under the authority of the Board
of Directors.
E. Restrictions on Transfer
The face or reverse side of each certificate representing shares shall
bear a conspicuous notation of any restriction imposed by the corporation
upon the transfer of such shares.
F. Lost, Destroyed or Stolen Certificates
Where the owner claims that certificates for shares have been lost,
destroyed or wrongfully taken, a new certificate shall be issued in place
thereof if the owner (a) so requests before the corporation has notice that
such shares have been acquired by a bona fide purchaser, (b) files with the
corporation a sufficient indemnity bond if required by the Board of Directors
or any principal officer, and (c) satisfies such other reasonable
requirements as may be prescribed by or under the authority of the Board of
Directors.
G. Consideration for Shares
The Board of Directors may authorize shares to be issued for
consideration consisting of any tangible or intangible property or benefit to
the corporation, including cash, promissory notes, services performed,
contracts for services to be performed or other securities of the
corporation. Before the corporation issues shares, the Board of Directors
shall determine that the consideration received or to be received for the
shares to be issued is adequate. The determination of the Board of Directors
is conclusive insofar as the adequacy of consideration for the issuance of
shares relates to whether the shares are validly issued, fully paid and
nonassessable. The corporation may place in escrow shares issued in whole or
in part for a contract for future services or benefits, a promissory note, or
otherwise for property to be issued in the future, or make other arrangements
to restrict the transfer of the shares, and may credit distributions in
respect of the shares against their purchase price, until the services are
performed, the benefits or property are received or the promissory note is
paid. If the services are not performed, the benefits or property are not
received or the promissory note is not paid, the corporation may cancel, in
whole or in part, the shares escrowed or restricted and the distributions
credited.<PAGE>
<PAGE> 16
H. Stock Regulations
The Board of Directors shall have the power and authority to make all
such further rules and regulations not inconsistent with law as it may deem
expedient concerning the issue, transfer and registration of shares of the
corporation.
ARTICLE VII SEAL
The Board of Directors shall provide for a corporate seal for the
corporation which shall be circular in form and shall have inscribed thereon
the name of the corporation, the state of incorporation and the words
"Corporate Seal".
ARTICLE VIII INDEMNIFICATION
Provision of Indemnification. The corporation shall, to the fullest
extent permitted or required by Sections 180.0850 to 180.0859, inclusive, of
the Wisconsin Business Corpora-tion Law, including any amendments thereto
(but in the case of any such amendment, only to the extent such amendment
permits or requires the corporation to provide broader indemnification rights
than prior to such amendment), indemnify its Directors and Officers against
any and all Liabilities, and advance any and all reasonable Expenses,
incurred thereby in any Proceeding to which any such Director of Officer is a
Party because he or she is or was a Director or Officer of the corporation.
The corporation shall also indemnify an employee who is not a Director or
Officer, to the extent that the employee has been successful on the merits or
otherwise in defense of a Proceeding, for all reasonable Expenses incurred in
the Proceeding if the employee was a Party because he or she is or was an
employee of the corporation. The rights to indemnification granted hereunder
shall not be deemed exclusive of any other rights to indemnification against
Liabilities or the advancement of Expenses which a Director, Officer or
employee may be entitled under any written agreement, Board resolution, vote
of shareholders, the Wisconsin Business Corporation Law or otherwise. The
corporation may, but shall not be required to, supplement the foregoing
rights to indemnification against Liabilities and advancement of Expenses
under this Section 8.1 by the purchase of insurance on behalf of any one or
more of such Directors, Officers or employees, whether or not the corporation
would be obligated to indemnify or advance Expenses to such Director, Officer
or employee under this Section 8.1. All capitalized terms used in this
Article VIII and not otherwise defined herein shall have the meaning set
forth in Section 180.0850 of the Wisconsin Business Corporation Law.
ARTICLE IX AMENDMENTS
A. By Shareholder
Except as otherwise provided in the articles of incorporation and
these by-laws, the shareholders shall have the power to adopt, amend, alter,
change or repeal any of the by-laws of the corporation by the affirmative
vote of shareholders holding not less than a majority of the voting power of
the then outstanding shares of all classes of capital stock of the
corporation generally possession, voting rights present or represented at any
annual or special meeting of the shareholders at which a quorum is in
attendance.
B. By Directors
Except as otherwise provided by the Wisconsin Business Corporation Law,
the articles of incorporation and these by-laws, the Board of Directors shall
have the power to adopt, amend, alter, change or repeal any of the by-laws of
the corporation by the affirmative vote of a majority of the directors
present at any meeting of the Board of Directors at which a quorum is in
attendance; but no by-law adopted by the shareholders shall be<PAGE>
<PAGE> 17
amended or repealed by the Board of Directors if the by-law so adopted so
provides. The manner of adoption of these by-laws or any section or
provision thereof shall not be deemed to impair or negate the power of the
Board of Directors to adopt, amend, alter, change or repeal these by-laws as
provided herein.
C. Implied Amendments
Any action taken or authorized by the shareholders or by the Board of
Directors which would be inconsistent with the by-laws then in effect but
which is taken or authorized by affirmative vote of not less than the number
of shares or the number of directors required to amend the by-laws so that
the by-laws would be consistent with such action shall be given the same
effect as though the by-laws had been temporarily amended or suspended so
far, but only so far, as is necessary to permit the specific action so taken
or authorized.
<PAGE>
<PAGE>
<PAGE> 1
EXHIBIT 4-11
Citicorp Securities, Inc.
February 14, 1994
To: The Lenders in the WICOR, Inc., Wisconsin Gas Company, and Sta-Rite
Industries, Inc. Credit Agreements dated March 29, 1993
Re: Extension Request
Ladies and Gentlemen:
WICOR, Wisconsin Gas and Sta-Rite Industries have each requested a one-year
extension of the Termination Date under Section 2.17 of their respective
credit agreements (attached). If approved by all Lenders, the new
Termination Date as extended would be March 29, 1997 unless the Commitments
were terminated or reduced in whole pursuant to Sections 2.05 or 6.01.
Audited financial statements for each company are not available at this time.
The companies have provided unaudited financial statements certified by a
senior financial officer, copies of which are enclosed with this letter.
Audited financials will follow shortly as required under the extension
provisions.
would you please notify Citibank of your decision by March 17, 1994? If you
approve the extension, please indicate your approval by signing at the
appropriate place at the bottom of the two copies of this letter. Please
return both copies to me. I will notify the banks of the outcome as soon as
all Lenders have responded. If approved, the extension would be effective on
the anniversary date of the credit agreements, and I will send copies of all
the signatures for your files.
Should you have any questions, please call me at (212)559-6086.
Sincerely,
Emily J. Eisenlohr Approved By Anita J. Brichell
Vice President -------------------
Title: Vice President
attach Bank Citibank, N.A.
Date March 15, 1994
cc: James J. Monnat
Arthur R. Meyer<PAGE>
<PAGE>
<PAGE> 1
EXHIBIT 10.10
WICOR, Inc.
Officers' Incentive Compensation Plan
1995
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:
Award as Percent of Salary
------------------------------
Position Minimum Target Maximum
-------------- --------- -------- ---------
CEO, WICOR 0% 50% 75.0%
Others 0% 40% 60.0%
B. Each executive's award will be determined based on a combination
of WICOR, subsidiary and individual performance, with specific
weights as follows:
Percentage
Of Award Determined By:
-----------------------------
WICOR Subsidi- Individ-
Perform- ary Per- ual Per-
Position ance formance formance
------------- -------- -------- --------
CEO, WICOR 75% 0% 25%
Subsidiary
Unit Head 25% 50% 25%
CFO, WICOR 75% 0% 25%
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<PAGE>
<PAGE> 2
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:
Perform- Award As
Performance ance As % 1995 % Of Tar-
Level Of Target EPS get Award
---------------- --------- -------- ---------
Below Threshold < 85% < $2.00 0.0%
Threshold 85% $2.00 1.0%
Target 100% $2.34 - 100%
(budget)
Maximum or Above 120% or $2.81 or 150%
more more
For performance at levels between Threshold and Target or between
Target and Maximum, award calculations will be pro-rated on a
linear basis.
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
individual performance portion of the target award, and will be
determined and paid independently of Corporate financial perfor-
mance.
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. Performance Period
Company performance goals will be for the 1995 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:<PAGE>
<PAGE> 3
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, 1995.
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
EXHIBIT 10.12
Wisconsin Gas Company
Officers' Incentive Compensation Plan
1995
I. Objectives
The principal objectives of the Plan are:
A. To motivate and to provide incentive for key officers and
executive management team (EMT) 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
and EMT 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
participant, as a percentage of base salary, are as follows:
Award as % of Salary
------------------------------
Position Minimum Target Maximum
---------------- --------- -------- ---------
President & CEO 0% 40% 60%
VP and EMT 0% 20% 30%
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 remain-
ing 50% will be determined based on the WICOR Officers' Incentive
Compensation Plan.
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<PAGE>
<PAGE> 2
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 1995 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 1995, 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:
<TABLE>
<CAPTION>
Net Income Award Determination
--------------------------------------------
Net Income
as % of % of Target
Performance Level Budget Awarded
------------------- ---------- -----------
<S> <C> <C>
Less than Threshold < 85% 0.0%
Threshold 85% 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 1995, the amount of targeted net income is set forth in
Exhibit I.
C. Total performance awards will be calculated by combining the
payouts from Performance Plus, Net Income and Individual
Components.<PAGE>
<PAGE> 3
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
participants 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.
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:<PAGE>
<PAGE> 4
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.
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> 5
Exhibit I
Wisconsin Gas Company
Incentive Compensation Plan
Formula Performance Goals
1995
Performance Plus*
Maximum
Points
1. Rate Improvement
Improvement in Residential Rates 5
2. Customer Service
Favorability/Customer Satisfaction 5
3. Safety 5
4. Cost Effectiveness
Operation & Maintenance Expense 5
5. Competitiveness
Margin Rate Reductions 5
----------
Maximum Total Points (Target = 15 points) 25
==========
6. Multiplier
Net Income as % of Budget Multiplier
------------------------- ------------
Less than 85% 0.0000
85% 0.0100
90% 0.3333
95% 0.6667
100% 1.0000
110% 1.2500
120% 1.5000
* This is a summarization of the Performance Plus Plan which will govern
the actual calculation of the payout amounts.
Net Income as a % of Budget
Minimum (85%) $19,690,000
Target (100%) $23,165,000
Maximum (120%) $27,798,000 <PAGE>
<PAGE>
<PAGE> 1
EXHIBIT 10.17
Sta-Rite Industries, Inc.
Officers' Incentive Compensation Plan
1995
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. Eligibility
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:
Award as Percent of Base Salary
-------------------------------
Position Minimum Target Maximum
----------------- ----------- -------- ---------
President and CEO 0% 40% 60.0%
VP 0% 30% 45.0%
B. Only 50% of the President and CEO'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.
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.<PAGE>
<PAGE> 2
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 indepen-
dently 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 1995 are set forth on Exhibit I.
V. Performance Period
Company performance goals will be for the 1995 calendar year.
VI. Bonus Award Determination
A. Each year management will establish appropriate formula perfor-
mance levels for minimum, target and maximum bonus awards.
B. As noted in Section III A, the target bonus amount for the
President and CEO 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:
Level of
Performance Objective Percent of
Level Achieved Target Awarded
------------------- ----------- --------------
Less than Treshold < 79% 0.0%
Threshold 79% 1.0%
Target 100% 100.0%
Maximum 120% 150.0%
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.<PAGE>
<PAGE> 3
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.
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> 4
Exhibit I
Sta-Rite Industries, Inc.
Incentive Compensation Plan
Formula Performance Goals 1995
Performance Goal: Net Earnings ($000) Return an Assets
----------------- ------------------- ----------------
Minimum $ 9,900 5.5%
Target $12,500 6.9%
Maximum $15,000 8.3% <PAGE>
<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
64% of consolidated revenues and 67% of consolidated operating income in
1994. However, the manufacturing segment has grown significantly in recent
years with operating income more than doubling since 1992.
WICOR earnings were $33.2 million in 1994, or $1.99 per share of common
stock, compared with $29.3 million, or $1.82 per share in 1993, and $22.8
million, or $1.47 per share in 1992 ($14.8 million, or $0.96 per share after
the cumulative effect of accounting changes).
Gas sales volumes decreased in 1994, despite substantial customer
additions, primarily as a result of warmer than normal weather, after having
increased in 1993 as a result of colder weather and customer additions in
1992 and 1993. Manufacturing operations in 1994 continued to show significant
improvement as a result of more favorable economic conditions, continuing
strong international sales, and new product introductions.
Net cash flows from operations for the years 1992 through 1994 totalled
$144.0 million. Cash proceeds from the $92.2 million net increase in long-
term debt, common stock and short-term debt, along with the net cash flows
from operations provided most of the funding for $178.8 million of capital
expenditures and $64.2 million of dividends for that three year period.
Segment data for WICOR's operations are summarized below in millions of
dollars.
<TABLE>
<CAPTION>
Operating Revenues 1994 1993 1992
----------------------------- -------- -------- --------
<S> <C> <C> <C>
Gas distribution $ 556.6 $ 574.8 $ 495.4
Manufacturing 311.2 274.7 252.0
-------- -------- --------
$ 867.8 $ 849.5 $ 747.4
======== ======== ========
Depreciation and Amortization 1994 1993 1992
----------------------------- -------- -------- --------
Gas distribution $ 37.4 $ 34.8 $ 30.5
Manufacturing 9.7 8.9 9.7
-------- -------- --------
$ 47.1 $ 43.7 $ 40.2
======== ======== ========
Operating Income 1994 1993 1992
----------------------------- -------- -------- --------
Gas distribution $ 44.4 $ 46.2 $ 43.3
Manufacturing 22.2 17.8 10.0
-------- -------- --------
$ 66.6 $ 64.0 $ 53.3
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Estimated Actual
Capital Expenditures 1995 1994 1993 1992
----------------------------- ---------- -------- -------- --------
<S> <C> <C> <C> <C>
Gas distribution $ 49.7 $ 44.6 $ 42.3 $ 62.1
Manufacturing 20.3 10.5 9.6 9.8
---------- -------- -------- --------
$ 70.0 $ 55.1 $ 51.9 $ 71.9
========== ======== ======== ========
/TABLE
<PAGE>
<PAGE> 2
<TABLE>
<CAPTION>
Identifiable Assets 1994 1993 1992
------------------------------ -------- -------- --------
<S> <C> <C> <C>
Gas distribution $ 707.9 $ 737.2 $ 634.6
Manufacturing 222.8 196.5 191.2
-------- -------- --------
$ 930.7 $ 933.7 $ 825.8
======== ======== ========
</TABLE>
RESULTS OF OPERATIONS
Gas Distribution --
Although sales margins increased in 1994, they were offset by higher
levels of operating expenses, resulting in a decrease in operating income as
compared with 1993. The 1994 earnings reflect a 10.1% return on weighted
average utility common equity. A $10.1 million or 4.9% annual margin rate
decrease, became effective on November 14, 1994. That rate order also
retained the authorized return on utility common equity of 11.8%. Margins
benefited in 1993 from rate increases effective in November 1992 and November
1993.
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 the same margin as
sales 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 flow through to
revenue under a gas adjustment clause, with no effect on margin.
<TABLE>
<CAPTION>
(Millions of Dollars) 1994 1993 1992
------------------------- -------- -------- --------
<S> <C> <C> <C>
Gas sales revenue $ 550.0 $ 565.1 $ 485.3
Cost of gas sold 357.5 382.0 319.4
Gas sales margin 192.5 183.1 165.9
Gas transportation margin 6.6 9.7 10.1
-------- -------- --------
Total margin $ 199.1 $ 192.8 $ 176.0
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
(Millions of Therms) 1994 1993 1992
------------------------- -------- -------- --------
<S> <C> <C> <C>
Sales volumes
Firm 795 823 782
Interruptible 282 208 174
Transport volumes 119 174 214
-------- -------- --------
Total throughput 1,196 1,205 1,170
======== ======== ========
/TABLE
<PAGE>
<PAGE> 3
Total gas margin increased by 3% and 10% in 1994 and 1993,
respectively. The increase in 1994 was due to 1993 rate increases which were
offset by the impact of lower volume sales and the 1994 rate decrease. Lower
volumes in 1994 were primarily due to weather which was 5% warmer than 1993.
Assuming normal weather in 1994 WICOR earnings would have been approximately
$0.26 per share higher. The increase in 1993 gas margins was due primarily to
rate increases in 1993 and 1992 and to increased sales volumes. Weather in
1993 which was 1% colder than 1992 and a 3% increase in residential customers
helped to increase the 1993 sales volumes. In 1994 and 1993 a number of
industrial customers switched between interruptible sales and transportation
services. There is no impact on margins from the switching activity.
Operation and maintenance expenses increased by $6.1 million or 6% in
1994. The increase was in large measure due to increases in uncollectible
receivables expense ($2.8 million) and amortization of business system
software costs ($1.6 million). These increases in expenses are being
recovered in rates on an annual basis under the November 1993 rate order.
Included in 1994 operations expense is a one-time charge of $2.7 million
relating to the election by 131 employees of an early retirement option.
Savings in 1994 from these retirements have been realized and have offset
this charge. Operation and maintenance expenses increased by $10.9 million or
11% in 1993. The increase was primarily due to higher costs for employee
benefits, business systems software amortization, conservation programs, and
uncollectible receivables. These additional costs are being recovered as a
result of the 1992 and 1993 rate orders.
Manufacturing Operations --
Manufacturing operating income in 1994 was $22.2 million compared with
$17.8 million in 1993 and $10.0 million in 1992. The improvements were
primarily the result of increased sales. Sales in 1994 were $311.2 million,
an increase of 13% over 1993. International sales improved by 21% and
domestic sales also contributed to the increase. Significant sales
improvements were noted in the water systems, pool and spa, recreational
vehicle, marine, and industrial markets.
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 also were significant factors contributing to the
increase.
International and export sales represented 37% of manufacturing sales
in 1994 and 34% in both 1993 and 1992. The increase in 1994 is primarily
related to sales growth that occurred in the Company's Australian and
European markets.
Operating expenses increased in 1994 by 11% over 1993 primarily as a
result of increased sales. As a percentage of sales, however, 1994 operating
expenses declined slightly from 1993. Operating expenses decreased by 2% in
1993, despite the 9% increase in sales. Much of the 1993 savings was
generated through administrative personnel reductions in 1992 and 1993.
<TABLE>
<CAPTION>
Bar chart of WICOR Operating Income by segment
(millions of dollars)
1990 1991 1992 1993 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Gas distribution $ 34.9 $ 39.5 $ 43.3 $ 46.2 $ 44.4
Maunufacturing 9.7 11.7 10.0 17.8 22.2
------ ------ ------ ------ ------
$ 44.6 $ 51.2 $ 53.3 $ 64.0 $ 66.6
====== ====== ====== ====== ======
/TABLE
<PAGE>
<PAGE> 4
Interest Expense, Other Income and Expenses and Income Taxes --
The 1994 decrease in interest expense as compared to 1993 was due
primarily to a September 1993 long-term debt refinancing and to reduced
levels of short-term borrowings. Both interest income and interest expense
declined in 1993 as a result of lower interest rates.
Income tax expense decreased in 1994 despite the increase in pre-tax
book income. The effective income tax rate was reduced in 1994 primarily as a
result of utilizing foreign tax incentives and the settlement of disputed tax
matters. 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 to 35%
effective January 1, 1993.
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 9.
Effects of Changing Prices --
It is management's view that changes in the rate of inflation have not
had a significant effect on WICOR's income over the past three years.
Inflationary increases have been recovered through price increases or
productivity improvements.
In November 1994, Wisconsin Gas received approval from the Public
Service Commission of Wisconsin (PSCW) to use an alternative method of
ratemaking that includes a three year margin rate cap. After reviewing the
impact of the margin rate cap and other factors, management believes that
productivity improvements are likely to offset the impact of inflationary
cost increases. This alternative method is discussed on page 22 under
"Regulatory Matters."
<TABLE>
<CAPTION>
Bar chart of WICOR Return on Average Common Equity
before cumulative effects of accounting changes
1990 1991 1992 1993 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Percent 6.8% 9.5% 9.2% 11.2% 11.6%
</TABLE>
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 increased to $103.6
million in 1994, compared with $3.4 million in 1993 and $37.0 million in
1992. The comparative increase and decrease in cash flow in 1994 and 1993,
respectively, are primarily due to funds used by Wisconsin Gas to purchase
its initial inventory of 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.
Investment Activities --
Capital expenditures increased by $3.1 million in 1994 after decreasing
by $20.0 million in 1993 and increasing by $26.8 million in 1992. Utility
expenditures returned to more normal levels in 1994 and 1993 following
completion of a major expansion project in 1992. Both utility capital
expenditures and manufacturing capital expenditures are expected to increase
in 1995, and most likely will be funded from operations.<PAGE>
<PAGE> 5
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 $0.1 million, $2.1 million, and
$9.8 million in 1994, 1993, and 1992, respectively, in other acquisition
activity.
In January 1995, WICOR sold its interest in Filtron Technology Corp., a
manufacturer of filtration products for approximately $5 million.
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, 1994, WICOR would be permitted to invest an additional $78.7
million in nonutility investments under this order. Nonutility subsidiaries
can also borrow additional amounts for acquisitions within certain PSCW
guidelines (See Note 6).
<TABLE>
<CAPTION>
Bar chart of Annual Degree Days
% warmer than 20-year average
1990 1991 1992 1993 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
% warmer 16.0% 10.8% 6.4% 4.1% 9.0%
</TABLE>
Financing Activities --
The Company does not anticipate the need to issue any long-term debt in
1995, but it may, in 1996, refinance $50.0 million of notes issued by
Wisconsin Gas that are due in 1997. During 1993, Wisconsin Gas issued $45
million of 6.6% Notes due in 2013, the proceeds of which were used to
refinance $45 million of first mortgage bonds which had higher interest
rates. There were no issues of long-term debt in 1992. The Company's debt
portion of capitalization decreased to 36% in 1994 as compared to 38% in 1993
and 40% in 1992. The utility's embedded cost of long-term debt was 8.1%,
8.9%, and 9.2% at December 31, 1994, 1993, and 1992, respectively.
WICOR raised its dividend by 3% in 1994, 1993, and 1992. The current
annual dividend rate is $1.60 per share. At December 31, 1994 the Company had
$57.4 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, Wisconsin residents and certain suppliers
to purchase WICOR common stock directly and through dividend reinvestment
without paying fees or service charges. During 1994 and 1993, respectively,
511,000 and 685,000 shares of common stock were issued through the WICOR Plan
and through various employee benefit plans. These stock issuances provided
funds to the Company of $10.6 million and $16.7 million. Beginning in 1995,
it is anticipated that the share requirements for the WICOR Plan will be met
through open market purchases of common stock.
As described in Note 6, a November 1993 PSCW rate order retained
certain limitations with respect to equity levels and dividend payments of
Wisconsin Gas. Restrictions imposed by the PSCW are not expected to have any
material effect on WICOR's ability to meet its cash obligations.
<TABLE>
<CAPTION>
Bar chart of Manufacturing International and Export Sales
millions of dollars
1990 1991 1992 1993 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Dollars $ 64.9 $ 75.5 $ 85.9 $ 93.8 $114.2
/TABLE
<PAGE>
<PAGE> 6
Wisconsin Gas' ratio of pre-tax earnings to fixed charges was 2.9 in
1994 and 1993 and 2.8 in 1992, as earnings and fixed charges remained
somewhat constant.
Access to the credit markets and the costs associated therewith 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-. Such ratings are not a
recommendation to buy, sell or hold securities, but rather an indication of
credit worthiness.
The following is a summary of the meanings of the ratings shown above
and the relative rank of the Company's rating within each agency's
classification system. Moody's top four corporate bond ratings (Aaa, Aa, A
and Baa) are generally considered "investment grade." Obligations which are
rated "Aa" are judged to be of high quality by all standards. Together with
the Aaa group they comprise what are generally known as high-grade bonds. Aa
securities are rated lower than the Aaa rated bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risk appear somewhat larger than
the Aaa securities. A numerical modifier ranks the security within the
category with a "1" indicating the high end, a "2" indicating the midrange
and a "3" indicating the low end of the category. Standard & Poor's top four
corporate bond ratings (AAA, AA, A and BBB) are considered "investment
grade." Based on Standard & Poor's rating system, debt rated "AA" has a very
strong capacity to pay interest and repay principal and differs from the
highest rated issues only in small degree. A plus (+) or minus (-) sign may
be used after Standard & Poor's ratings to designate the relative position of
a credit rating within the rating category.
Commercial paper carrying an A-1+ rating by Standard & Poor's
Corporation and P-1 by Moody's Investors Service is routinely issued by
Wisconsin Gas as needed to finance seasonal working capital needs,
principally customer receivables and gas in storage. Such ratings are not a
recommendation to buy, sell, or hold securities, but rather an indication of
credit worthiness. Moody's top three short-term debt ratings (P-1, P-2 and P-
3) are generally considered investment grade and are intended to indicate the
relative repayment ability of related issuers. According to Moody's rating
system, short-term debt rated "P-1" has a superior ability for repayment of
senior short-term debt obligations. The utility had no short-term debt
outstanding for two months in 1994.
<TABLE>
<CAPTION>
Bar chart of WICOR Capital Expenditures
millions of dollars
1990 1991 1992 1993 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Gas distribution $ 28.0 $ 34.6 $ 62.1 $ 42.3 $ 44.6
Manufacturing 8.3 10.5 9.8 9.6 10.5
------ ------ ------ ------ ------
$ 36.3 $ 45.1 $ 71.9 $ 51.9 $ 55.1
====== ====== ====== ====== ======
</TABLE>
In March 1993, WICOR and its subsidiaries renewed a three-year
revolving credit agreement, including separate agreements for $25 million for
WICOR, $30 million for Wisconsin Gas, and $15 million for Sta-Rite. In 1994
the revolving credit agreement was extended an additional year to March 1997.
In 1993, Sta-Rite renewed a $25 million commercial paper issuance facility.
Commercial paper outstanding at December 31, 1994 and 1993 was $94.6 million
and $117.1 million, respectively.
The Company believes that it has adequate capacity to fund its
operations for the foreseeable future through its borrowing arrangements and
internally generated cash. <PAGE>
<PAGE> 7
Regulatory Matters --
In July 1993, Wisconsin Gas submitted an incentive rate making proposal
to the PSCW. In its November 1994 rate order, the PSCW significantly modified
the Wisconsin Gas proposal. Under the PSCW rate order, Wisconsin Gas rates
are subject to a three year margin rate cap (through October 1997) based on
the rates approved in November 1993. The PSCW order also specified margin
rate floors for each rate class. Wisconsin Gas has the ability to raise or
lower margin rates within the specified range on a quarterly basis. The rates
at December 31, 1994 are at the top of the range. In addition, the PSCW order
required Wisconsin Gas to reduce its rates by $10.1 million, on an annual
basis, to reflect a reduction in certain non-cash expenses. Over a twelve
month period, beginning with the effective date of the order, this rate
reduction will result in no net income impact, but will reduce cash flow. The
rate order was effective November 14, 1994. Under the purchased gas
adjustment provision of its rate schedules, Wisconsin Gas continues to
recover the actual purchased gas costs it incurs.
<TABLE>
<CAPTION>
Bar chart of WICOR Capitalization
percent
1990 1991 1992 1993 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Long-term debt 35.4% 40.9% 40.1% 37.9% 35.7%
Common stock 64.6% 59.1% 59.9% 62.1% 64.3%
</TABLE>
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 would be required
for unregulated businesses. 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. SFAS No. 71 continues to
be applicable to Wisconsin Gas in that its rates are approved by a third
party regulator and are designed to recover its cost of service. Wisconsin
Gas believes its current cost based rates are competitive in the current
environment.
In April 1992, the FERC issued Order No. 636 requiring interstate
pipelines to "unbundle" their services. As a result, Wisconsin Gas purchases
gas supplies separately from interstate transportation services. 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. In spite of severely cold
weather in January 1994, Wisconsin Gas was able to meet the needs of its
customers under these changing conditions.
Pipelines have been allowed to pass through to local gas distributors
various costs incurred in the transition to Order No. 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 is in the process of preparing a remedial action options
report and recommendation for presentation to the Wisconsin Department of
Natural Resources concerning two previously owned sites on which it operated
manufactured gas plants. Wisconsin Gas currently anticipates that the costs
incurred in the remediation effort will be recoverable from insurers or
through rates and will not have a material adverse effect on the Company's
liquidity or results of operations. <PAGE>
<PAGE> 8
The manufacturing segment has provided reserves believed sufficient to
cover its estimated costs related to contamination associated with Sta-Rite's
manufacturing facilities. (See Note 7 for a more detailed discussion of these
matters.)<PAGE>
<PAGE> 9
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, 1994 and 1993, and the related consolidated
statements of income, common equity and cash flows for each of the three
years in the period ended December 31, 1994. These financial statements are
the responsibility of WICOR Inc.'s management. Our responsibility is to
express an opinion on these financial 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 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, 1994 and 1993, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1994, in conformity with generally accepted accounting
principles.
As discussed in Notes 3 and 9 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 LLP
February 2, 1995
<PAGE>
<PAGE> 10
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(Thousands of Dollars,
Except per Share Amounts)
Year Ended December 31, 1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Operating Revenues
Gas distribution $ 556,587 $ 574,835 $ 495,415
Manufacturing 311,168 274,693 251,994
---------- ---------- ----------
867,755 849,528 747,409
---------- ---------- ----------
Operating Costs and Expenses
Cost of gas sold 357,482 382,027 319,377
Manufacturing cost of sales 222,679 197,297 180,388
Operations and maintenance 181,820 169,068 159,009
Depreciation and amortization 29,416 28,044 26,650
Taxes, other than income taxes 9,748 9,141 8,670
---------- ---------- ----------
801,145 785,577 694,094
---------- ---------- ----------
Operating Income 66,610 63,951 53,315
---------- ---------- ----------
Interest expense (16,698) (17,428) (18,126)
Other income and expenses 574 266 1,124
---------- ---------- ----------
Income Before Income Taxes 50,486 46,789 36,313
Income taxes 17,312 17,476 13,549
---------- ---------- ----------
Income Before Cumulative Effects of
Accounting Changes 33,174 29,313 22,764
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 $ 33,174 $ 29,313 $ 14,799
========== ========== ==========
Per Share of Common Stock
Income before cumulative effects
of accounting changes $ 1.99 $ 1.82 $ 1.47
Cumulative effect of accounting change
for postretirement benefits - - (0.40)
Cumulative effect of accounting change
for income taxes - - (0.11)
---------- ---------- ----------
Net Income $ 1.99 $ 1.82 $ 0.96
========== ========== ==========
Cash dividends $ 1.58 $ 1.54 $ 1.50
Average Common Shares Outstanding (000's) 16,708 16,096 15,490
</TABLE>
The accompanying notes are an integral part of this statement.<PAGE>
<PAGE> 11
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Thousands of Dollars) December 31, 1994 1993
---------- ----------
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 35,138 $ 22,953
Accounts receivable, less allowance
for doubtful accounts of $9,233
and $9,351, respectively 103,487 111,408
Accrued utility revenues 40,327 53,483
Manufacturing inventories 60,239 58,079
Gas in storage, at weighted average cost 38,050 44,697
Deferred income taxes 15,540 10,005
Prepayments and other 19,519 13,969
---------- ----------
312,300 314,594
---------- ----------
Property, Plant and Equipment, at cost
Gas distribution 718,988 679,968
Manufacturing 103,696 97,736
---------- ----------
822,684 777,704
Less accumulated depreciation
and amortization 407,121 377,004
---------- ----------
415,563 400,700
---------- ----------
Deferred Charges and Other
Systems development costs 34,071 38,808
Deferred environmental costs 41,942 41,641
Prepaid pension costs 30,865 29,580
Gas transition costs 7,411 15,485
Other regulatory assets 51,543 57,211
Other 37,013 35,707
---------- ----------
202,845 218,432
---------- ----------
$ 930,708 $ 933,726
========== ==========
</TABLE>
The accompanying notes are an integral part of this statement.<PAGE>
<PAGE> 12
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Thousands of dollars)
December 31, 1994 1994 1993
---------- ----------
<S> <C> <C>
Liabilities and Capitalization
Current Liabilities
Accounts payable $ 65,626 $ 62,683
Short-term borrowings 111,506 134,918
Refundable gas costs 18,058 15,596
Current portion of long-term debt 5,031 2,847
Accrued taxes 8,400 10,089
Accrued payroll and benefits 15,141 14,656
Other 15,661 15,199
---------- ----------
239,423 255,988
---------- ----------
Deferred Credits and Other
Deferred income taxes 42,322 45,878
Environmental remediation costs 37,188 40,000
Postretirement benefit obligation 69,730 67,510
Unamortized investment tax credit 8,187 8,654
Gas transition costs 7,411 15,485
Other regulatory liabilities 54,636 50,179
Other 18,674 14,526
---------- ----------
238,148 242,232
---------- ----------
Commitments and Contingencies (Note 7)
---------- ----------
Capitalization (See accompanying statement)
Long-term debt 161,669 165,230
Redeemable preferred stock - -
Common equity 291,468 270,276
---------- ----------
453,137 435,506
---------- ----------
$ 930,708 $ 933,726
========== ==========
</TABLE>
The accompanying notes are an integral part of this statement.<PAGE>
<PAGE> 13
CONSOLIDATED STATEMENTS OF CASH FLOW
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
(Thousands of Dollars)
Year Ended December 31, 1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Operations
Net income $ 33,174 $ 29,313 $ 14,799
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 and amortization 47,097 43,738 40,200
Deferred income taxes (9,091) (3,969) (2,958)
Changes in:
Receivables 21,105 (13,993) (8,627)
Manufacturing inventories (2,027) (2,590) (839)
Gas in storage 6,647 (38,050) (6,252)
Other current assets (4,827) (569) 6,016
Systems development costs (841) (6,530) (9,976)
Accounts payable 2,943 (11,055) (2,259)
Refundable gas costs 2,462 1,955 5,633
Accrued taxes (2,412) 9,169 (2,098)
Other current liabilities 947 (292) (1,754)
Other noncurrent assets and liabilities 8,374 (3,726) (2,838)
---------- ---------- ----------
Cash provided by operating activities 103,551 3,401 37,012
---------- ---------- ----------
Investment Activities
Capital expenditures (55,051) (51,906) (71,873)
Proceeds from sale of assets 42 5,328 761
Acquisitions (72) (2,120) (9,776)
Other, net 343 541 274
---------- ---------- ----------
Cash (used in) investing activities (54,738) (48,157) (80,614)
---------- ---------- ----------
Financing Activities
Change in short-term borrowings (21,617) 59,603 35,726
Issuance of long-term debt 1,869 47,446 ,173
Reduction of long-term debt (4,795) (50,982) (8,674)
Issuance of common stock 10,649 16,682 6,079
Dividends paid on common stock,
less amounts reinvested (23,247) (21,450) (19,459)
Other 513 (222) (734)
---------- ---------- ----------
Cash (used in) provided
by financing activities (36,628) 51,077 13,111
---------- ---------- ----------
Change in Cash and Cash Equivalents 12,185 6,321 (30,491)
Cash and cash equivalents at
beginning of year 22,953 16,632 47,123
---------- ---------- ----------
Cash and Cash Equivalents at End of Year $ 35,138 $ 22,953 $ 16,632
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
<PAGE> 14
CONSOLIDATED STATEMENTS OF CAPITALIZATION
<TABLE>
<CAPTION>
(Thousands of Dollars) December 31, 1994 1993
---------- ----------
<S> <C> <C>
Long-Term Debt
Wisconsin Gas:
First mortgage bonds
Adjustable Rate Series, 7.4% and
8.1%, respectively, due 2002 $ 10,000 $ 14,000
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 45,000
Sta-Rite:
First mortgage bonds, adjustable
rate, 7.8% to 8.1%, due semi-
annually through 2000 1,203 1,431
Industrial revenue bonds, 7-7/8%,
payable through 2000 2,190 2,575
Commercial paper under multi-year
credit agreement 6,853 4,758
Capital lease obligations and other 1,222 1,338
Unamortized (discount), net (1,169) (1,356)
ESOP loan guarantee 6,370 7,484
---------- ----------
161,669 165,230
---------- ----------
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 16,918,000
and 16,407,000 shares, respectively 16,918 16,407
Other paid in capital 180,000 166,710
Retained earnings 101,418 94,643
Unearned compensation - ESOP
and restricted stock (6,868) (7,484)
---------- ----------
291,468 270,276
---------- ----------
Total Capitalization $ 453,137 $ 435,506
========== ==========
</TABLE>
The accompanying notes are an integral part of this statement.<PAGE>
<PAGE> 15
CONSOLIDATED STATEMENTS OF COMMON EQUITY
<TABLE>
<CAPTION>
(Thousands of Dollars)
December 31, 1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Common Stock:
Balance at beginning of year $ 16,407 $ 15,722 $ 15,366
Issued in connection with dividend
reinvestment, customer stock purchase
and employee benefit plans 511 685 356
---------- ---------- ----------
Balance at end of year 16,918 16,407 15,722
---------- ---------- ----------
Other Paid-in Capital:
Balance at beginning of year 166,710 148,064 139,931
Received in connection with dividend
reinvestment, customer stock purchase
and employee benefits plans 13,290 18,646 8,133
---------- ---------- ----------
Balance at end of year 180,000 166,710 148,064
---------- ---------- ----------
Retained Earnings:
Balance at beginning of year 94,643 90,102 97,906
Net income 33,174 29,313 14,799
Dividends on common stock (26,399) (24,099) (21,869)
Other - (673) (734)
---------- ---------- ----------
Balance at end of year 101,418 94,643 90,102
---------- ---------- ----------
Unearned Compensation - ESOP
and restricted stock:
Balance at beginning of year (7,484) (8,601) (9,750)
Loan payments 1,114 1,117 1,149
Issuance of restricted stock (723) - -
Amortization of restricted stock 225 - -
---------- ---------- ----------
Balance at end of year (6,868) (7,484) (8,601)
---------- ---------- ----------
Total Common Equity at End of Year $ 291,468 $ 270,276 $ 245,287
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of this statement.<PAGE>
<PAGE> 16
QUARTERLY FINANCIAL DATA (UNAUDITED)
Because seasonal factors significantly affect the Company's operations
(particularly at the Wisconsin Gas level), the following data may not be
comparable between quarters:
<TABLE>
<CAPTION>
(Thousands of Dollars, Except
per Share Amounts) Quarters: First Second Third Fourth
------------------------------------------ -------- --------- --------
<S> <C> <C> <C> <C>
1994
Operating revenues $ 320,625 $186,079 $151,037 $210,014
Operating income (loss) $ 49,444 $ 5,500 $ (8,668) $ 20,334
Income available for common stock$ 28,202 $ 998 $ (8,069) $ 12,043
Net income (loss) per
common share (a) $ 1.71 $ 0.06 $ (0.48) $ 0.71
1993
Operating revenues $ 272,660 $190,223 $152,801 $233,844
Operating income (loss) $ 41,689 $ 5,881 $ (8,406) $ 24,787
Income available for common stock$ 23,935 $ 576 $ (8,597) $ 13,399
Net income (loss) per
common share (a) $ 1.51 $ 0.04 $ (0.53) $ 0.82
</TABLE>
(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.<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., (WICOR or the Company) and its wholly-owned subsidiaries: Wisconsin Gas
Company (Wisconsin Gas), Sta-Rite Industries, Inc. (Sta-Rite), and SHURflo
Pump Manufacturing Co. (Shurflo). All appropriate intercompany transactions
have been eliminated. Certain amounts in financial statements of prior years
have been reclassified to conform to the presentation of the current year.
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.
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.
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.
The depreciation of Wisconsin Gas' assets is computed using straight-
line rates over estimated useful lives and considers salvage value. These
rates have been consistently used for ratemaking purposes. The composite
rates are 4.5% for 1994 and 4.7% for 1993 and 1992. 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. Regulatory Accounting and Deferred Charges
The Company and Wisconsin Gas account for their regulated operations in
accordance with Statement of Financial Accounting Standards (SFAS) No. 71,
"Accounting for the Effects of Certain Types of Regulation." This statement
sets forth the application of generally accepted accounting principles to
those companies whose rates are determined by an independent third-party
regulator. The economic effects of regulation can result in regulated
companies recording costs that have been or are expected to be allowed in the
ratemaking process in a period different from the period in which the costs
would be charged to expense by an unregulated enterprise. When this occurs,
costs are deferred as assets in the balance sheet (regulatory assets) and
recorded as expenses as those same amounts are reflected in rates.
Additionally, regulators can impose liabilities upon a regulated company for
amounts previously collected from customers and for amounts that are expected
to be refunded to customers (regulatory liabilities).<PAGE>
<PAGE> 18
The amounts recorded as regulatory assets and regulatory liabilities in
the Consolidated Balance Sheet at December 31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
(Thousands of Dollars) 1994 1993
-------------------------------------- ---------- ----------
<S> <C> <C>
Regulatory assets:
Deferred environmental costs $ 41,942 $ 41,641
Income tax-related amounts due from
customers (Note 3) 3,711 5,650
Postretirement benefit costs (Note 9) 47,832 51,561
Gas transition costs 7,411 15,485
Other 16,000 14,499
---------- ----------
$ 116,896 $ 128,836
========== ==========
Regulatory liabilities:
Income tax-related amounts due to
customers (Note 3) $ 18,792 $ 21,762
Pension costs (Note 9) 22,333 22,808
Refundable gas costs 18,058 15,596
Other 14,469 4,658
---------- ----------
$ 73,652 $ 64,824
========== ==========
</TABLE>
Consistent with PSCW regulation, Wisconsin Gas has capitalized 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 $13.9 million allowable annual provision for
doubtful accounts, including amortization of prior deferred amounts. See
Notes 7 and 9 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 49% and 54% of manufacturing inventories, in 1994 and
1993, respectively, are priced using the last-in, first-out (LIFO) method
(not in excess of market), with the remaining inventories priced using the
first-in, first-out (FIFO) method.
If the (FIFO) method had been used exclusively, manufacturing
inventories would have been $8.4 million and $8.0 million higher at December
31, 1994 and 1993, respectively.<PAGE>
<PAGE> 19
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.
The Company's dividends reinvested (pursuant to its dividend
reinvestment plan) totalled $3.2 million, $2.6 million and $2.4 million for
1994, 1993, and 1992, respectively.
For purposes of the Consolidated Statements 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, 1994, 1993 and 1992:
<TABLE>
<CAPTION>
(Thousands of Dollars) 1994 1993 1992
-------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Income taxes paid $ 31,384 $ 16,106 $ 8,805
Interest paid $ 15,714 $ 17,678 $ 17,404
</TABLE>
J. Derivative Financial Instruments
The Company, through a manufacturing subsidiary, has only limited
involvement with derivative financial instruments and does not use them for
trading or speculative purposes. Foreign exchange futures and forward
contracts are used to hedge foreign exchange exposure resulting from
intercompany purchases of products from United States plants. Gains and
losses from open contracts are deferred until recognized as part of the
purchase transaction. Such gains and losses included in net income in the
Consolidated Statements of Income for the years ended December 31, 1994, 1993
and 1992 were not material.
2. MERGERS AND ACQUISITIONS
On July 28, 1993, 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.
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 become 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' deferred income
taxes arising from the adoption represent amounts recoverable or refundable
through future rates and have been recorded as regulatory assets and
liabilities on the balance sheet.
The current and deferred components of income tax expense for each of
the years ended December 31, are as follows:<PAGE>
<PAGE> 20
<TABLE>
<CAPTION>
(Thousands of Dollars) 1994 1993 1992
---------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Current
Federal $ 23,516 $ 18,576 $ 3,818
State 5,816 4,742 1,405
Foreign 1,627 834 800
---------- ---------- ----------
Total Current 30,959 24,152 6,023
---------- ---------- ----------
Deferred
Federal (11,247) (6,432) 5,974
State (2,012) (961) 1,588
Foreign (388) 717 (36)
---------- ---------- ----------
Total Deferred (13,647) (6,676) 7,526
---------- ---------- ----------
Total Provision $ 17,312 $ 17,476 $ 13,549
========== ========== ==========
</TABLE>
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>
<CAPTION>
(Thousands of Dollars)
Year ended December 31, 1994 1993 1992
--------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Statutory U.S. tax rates $17,670 35.0% $16,376 35.0% $12,346 34.0%
State income taxes, net 2,518 5.0 2,326 5.0 1,841 5.1
Excess of foreign (benefit)
provision over U.S. stat-
utory tax rate (174) (0.3) 886 1.9 843 2.3
Investment credit restored (461) (0.9) (473) (1.0) (502) (1.4)
Excess deferred tax
amortization (505) (1.0) (532) (1.1) (507) (1.4)
Settlement of disputed
tax matters (998) (2.0) - - - -
Other, net (738) (1.5) (1,107) (2.4) (472) (1.3)
---------------- ---------------- ----------------
Effective Tax Rates $17,312 34.3% $17,476 37.4% $13,549 37.3%
================ ================ ================
/TABLE
<PAGE>
<PAGE> 21
The components of deferred income tax assets and liabilities at
December 31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
(Thousands of Dollars) 1994 1993
---------------------------------- ---------- ----------
<S> <C> <C>
Deferred Income Tax Assets
Recoverable gas costs $ 7,258 $ 5,928
Inventory 1,935 (2,052)
Deferred compensation 2,026 1,873
Other 4,321 4,256
---------- ----------
$ 15,540 $10,005
========== ==========
Deferred Income Tax Liabilities
Property related $ 41,054 $ 37,496
Systems development costs 13,675 15,576
Investment tax credit (5,416) (5,725)
Gas transition costs 2,974 5,633
Postretirement benefits (8,059) (5,503)
Deferred compensation (3,055) (2,747)
Pension benefits 2,842 2,249
Other (1,693) (1,101)
---------- ----------
$ 42,322 $ 45,878
========== ==========
</TABLE>
4. SHORT-TERM BORROWINGS
As of December 31, 1994 and 1993, the Company had total unsecured lines
of credit available from banks of $206.5 million and $183.4 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.
<TABLE>
<CAPTION>
December 31,
(Thousands of Dollars) 1994 1993
-------------------------------- ---------- ----------
<S> <C> <C>
Notes payable to banks
U.S. subsidiaries $ 100 $ 3,600
Non-U.S. subsidiaries 16,835 14,218
Commercial paper - U.S. 94,571 117,100
---------- ----------
$ 111,506 $ 134,918
========== ==========
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Weighted average interest rates
on debt outstanding at end of year:
Notes payable to banks
U.S. subsidiaries 7.5% 4.1%
Non-U.S. subsidiaries 6.2% 5.3%
Commercial paper - U.S. 5.9% 3.4%
/TABLE
<PAGE>
<PAGE> 22
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 first
mortgage bonds which have higher average interest rates. There were no
issuances of long-term debt in 1992. 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 $4.9 million, $4.7 million, $58.3 million, $42.8
million and $2.8 million in 1995, 1996, 1997, 1998 and 1999, respectively.
6. RESTRICTIONS
A November 1993 rate order issued by the PSCW 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). Under this requirement, $22.2
million of Wisconsin Gas' net assets at December 31, 1994, plus future
earnings, were available for such dividends without PSCW approval. In
addition, the PSCW must also approve any dividends in excess of $16 million
for any 12 month period beginning November 1 if such dividends would dilute
Wisconsin Gas' total equity below 48.43% of its total capitalization.
Wisconsin Gas paid $4 million in dividends in November 1994 and expects to
pay $16 million in dividends for the 12 months ending October, 1995.
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, 1994, $8.5 million of Sta-Rite net assets plus 50% of its future earnings
were available for payment of dividends to WICOR.
Combined restricted common equity of the Company's subsidiaries totaled
$234.1 million under the most restrictive provisions as of December 31, 1994;
accordingly, $57.4 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 Wisconsin Gas should remain the
predominant business, generally as measured by equity, within the holding
company system. The amount allowable for future nonutility investment at
December 31, 1994 was $78.7 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
A. Gas Supply
Wisconsin Gas has agreements for firm pipeline and storage capacity
that expire at various dates through 2008. The aggregate amount of required
payments under such agreements totals approximately $1,040 million, with
annual required payments of $132 million in 1995, $130 million in 1996, $126
million in 1997, $111 million in 1998 and $108 million in 1999. Wisconsin
Gas' total payments of fixed charges under all agreements were $130.4 million
in 1994, $133.9 million in 1993 and $83.5 million in 1992. The purchased gas
adjustment provisions of Wisconsin Gas' rate schedules permit the recovery of
gas costs from its customers. In 1992, the FERC issued Order No. 636 that,
among other things, mandated the unbundling of interstate pipeline sales
service and established certain open access transportation regulations that
became effective beginning in the 1993-94 heating season. Order No. 636
permits pipeline suppliers to pass through to Wisconsin Gas any prudently
incurred transition costs, such as unrecovered gas costs, gas supply
realignment costs and stranded investment costs. Wisconsin Gas estimates its
portion of such costs from all of its pipeline suppliers would approximate
$37.9 million based upon prior filings with FERC by the pipeline suppliers.
The pipeline suppliers will continue to file quarterly with the FERC for
recovery of actual costs incurred.<PAGE>
<PAGE> 23
The FERC has allowed ANR Pipeline Company to recover capacity and
"above market" supply costs associated with quantities purchased from Dakota
Gasification Company ("Dakota") under a long-term contract expiring in the
year 2009. Consistent with guidelines set forth in Order No. 636 ANR has
allocated 90% of Dakota costs to firm transportation service recoverable
through a reservation rate surcharge and 10% to interruptible service.
Pending a final settlement with all affected parties, ANR currently recovers
the difference between costs paid to Dakota and the current market price.
Based on Wisconsin Gas contracted quantities with ANR, Wisconsin Gas is
currently paying approximately $500,000 per month of Dakota costs. This
amount varies month-to-month and across years based on the spread between ANR
contract terms with Dakota and the market indices for pricing spot gas.
Transition costs billed to Wisconsin Gas are being recovered from
customers under the purchased gas provisions within its rate schedules.
Assuming no drastic changes in the market for natural gas, Wisconsin Gas does
not expect transition costs to significantly affect the total cost of gas to
its customers because (1) Wisconsin Gas will purchase its wellhead gas
supplies based upon market prices that should be below the cost of gas
previously embedded in the bundled pipeline sales service and (2) many
elements of transition costs were previously embedded in the rates for the
pipelines' bundled sales service. The unbundling of pipeline sales service
requires Wisconsin Gas to contract directly and separately for wellhead gas
supply and firm transportation services. As a result of FERC Order No. 636,
Wisconsin Gas has contracted directly for underground storage in 1993.
B. Capital Expenditures
Certain commitments have been made in connection with 1995 capital
expenditures. Wisconsin Gas capital expenditures for 1995 are estimated at
$50 million. Manufacturing capital expenditures for 1995 are estimated at $20
million.
C. Environmental Matters
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,
1994, the Company has accrued $37.2 million for cleanup costs in addition to
$4.0 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.
The Wisconsin Department of Natural Resources (WDNR) issued a Probable
Responsible Party letter to Wisconsin Gas for these two sites in September
1994. Following receipt of this letter, Wisconsin Gas and WDNR held an
initial meeting to discuss the sites. At the meeting it was agreed that
Wisconsin Gas would prepare a remedial action options report from which it
will select specific remedial actions for recommendation to the WDNR. This
information will be prepared in the first quarter of 1995. Barring unforeseen
delays, expenditures by Wisconsin Gas on remediation work will commence in
1995 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 the cost are expected to be
incurred in the first few years of the plan, monitoring of sites and other
necessary actions may be undertaken for up to 30 years.
In March 1994, Wisconsin Gas commenced suit against nine insurance
carriers seeking a declaratory judgment regarding insurance coverage for the
two sites. Settlements were reached with each of the carriers during 1994. If
the amount recovered from the insurance carriers is insufficient to remediate
both sites, expenditures not recovered will be allowed full recovery (other
than for carrying costs) in rates based upon recent PSCW orders. Accordingly,
the accrual has been offset by a deferred charge to a regulatory<PAGE>
<PAGE> 24
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, 1994, $4.0 million of such costs had been incurred.
On April 18, 1994, lawsuits were filed in Superior Court in Alameda
County, California, by the Attorney General of the State of California and
two environmental groups against four submersible pump manufacturers,
including Sta-Rite. The suit alleges that the four manufacturers have
produced and sold pumps with brass components which leach levels of lead in
excess of the levels permitted under California law. The lawsuits seek, among
other remedies, injunctive relief and unspecified monetary penalties. Sta-
Rite and the other named defendants dispute the allegations made in the
lawsuits and Sta-Rite intends to vigorously defend itself against the
actions. Based upon its investigation and the reserves established, the
Company believes resolution of the matter will not have a material, adverse
effect upon its results of operations or financial condition.
In July 1994, Sta-Rite was notified by the WDNR that it believed
solvents used at a manufacturing site previously operated by Sta-Rite have
migrated and have caused, or contributed to, the contamination of a
Deerfield, Wisconsin, municipal well and surrounding property. The population
of Deerfield is approximately 1,260 people. Based upon the current
investigation and reserves established, the Company believes that the
resolution of this matter will not have a material, adverse effect upon its
results of operations or financial condition.
D. Other
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. COMMON STOCK AND OTHER PAID-IN CAPITAL
As of December 31, 1994, 16,918,004 shares of common stock were issued
and outstanding and 3,112,806 shares were reserved for issuance under the
Company's dividend reinvestment, stock and incentive savings plans. In
addition, 20,041,872 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 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.
9. 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 November 1, 1992, Wisconsin Gas pension costs or
credits have been calculated in accordance with SFAS No. 87 and are
recoverable from customers. Prior to this date, pension costs were
recoverable in rates as funded.
The following table sets forth the funded status of pension plans at
December 31, 1994 and 1993. The cumulative difference between the amounts
funded and the amounts based on SFAS No. 87 through November 1, 1992 is being
amortized over an eight-year period effective November 1, 1994 and totalled
$22.3 million at December 31, 1994.<PAGE>
<PAGE> 25
<TABLE>
<CAPTION>
Assets Exceed Accumulated Benefits
Accumulated Benefits Exceed Assets
----------------------- -----------------------
(Thousands of
Dollars) December 31, 1994 1993 1994 1993
----------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Accumulated benefit obligation
Vested benefits $ (97,478) $(103,260) $ (5,825) $ (6,471)
Nonvested benefits (10,827) (11,198) (1,185) (87)
---------- ---------- ---------- ----------
(108,305) (114,458) (7,010) (6,558)
Effect of projected future
compensation levels (41,021) (49,961) (677) (537)
---------- ---------- ---------- ----------
Projected benefit obligation (149,326) (164,419) (7,687) (7,095)
Plan assets at fair value 197,278 228,091 209 176
---------- ---------- ---------- ----------
Plan assets greater(less) than
projected benefit obligation 47,952 63,672 (7,478) (6,919)
Unrecognized net (asset)
liability at September 30,
1985 being recognized over
approximately 16 years (16,777) (21,185) 1,035 1,104
Unrecognized prior
service costs 4,794 6,166 253 -
Unrecognized net (gain) loss (5,104) (19,073) 523 348
Additional minimum lia-
bility recorded - - (1,307) (1,037)
---------- ---------- ---------- ----------
Accrued pension asset
(liability) $ 30,865 $ 29,580 $ (6,974) $ (6,504)
========== ========== ========== ==========
</TABLE>
The weighted average discount rate assumptions used in determining the
actuarial present value of the projected benefit obligation were 8.25%, 7.5%
and 7.75% for 1994, 1993 and 1992, respectively. For 1994, the expected long-
term rate of return on assets and long-term rate of compensation growth were
8.6% and 5.3%, respectively. For 1993 and 1992, 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 for each of the years ended December 31, include the
following (income) expense:
<TABLE>
<CAPTION>
(Thousands of Dollars) 1994 1993 1992
------------------------------------ ---------- ---------- ----------
<S> <C> <C> <C>
Service costs $ 5,260 $ 5,658 $ 5,189
Interest costs on projected
benefit obligations 12,249 11,807 10,977
Actual loss (gain) on plan assets 1,225 (18,016) (16,085)
Net amortization and deferral (18,896) (69) (1,127)
Gain on early retirement incentive (268) - -
Amortization of regulatory liability (475) - -
Adjustment to utility funded amount - - 1,513
---------- ---------- ----------
Net pension (income) cost $ (905) $ (620) $ 467
========== ========== ==========
/TABLE
<PAGE>
<PAGE> 26
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.
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 for each of the
years ended December 31, consisted of the following components:
<TABLE>
<CAPTION>
(Thousands of Dollars) 1994 1993 1992
--------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Service cost $ 2,688 $ 2,813 $ 2,711
Interest cost on projected
benefit obligation 6,913 6,495 6,181
Actual loss (gain) on plan assets 147 (1,414) (895)
Amortization of regulatory asset 2,778 2,651 2,778
Net amortization and deferral (2,549) - -
Loss on early retirement incentive 3,650 - -
Adjustment to utility funded amount - - (2,108)
---------- ---------- ----------
Net postretirement benefit cost $ 13,627 $ 10,545 $ 8,667
========== ========== ==========
</TABLE>
The 1994 postretirement benefit cost was increased due to the early
retirement of 131 employees under a voluntary early retirement incentive plan
for employees age 55 and over.
The following table sets forth the plans' funded status, reconciled
with amounts recognized in the Company's Statement of Financial Position at
December 31, 1994 and 1993, respectively.
Accumulated benefit obligation
(Thousands of Dollars) 1994 1993
-------------------------------- ---------- ----------
Retirees $ (54,088) $ (43,548)
Active employees (29,544) (52,327)
---------- ----------
Accumulated benefit obligation (83,632) (95,875)
Plan assets at fair value 30,666 25,753
---------- ----------
Accumulated benefit obligation
in excess of plan assets (52,966) (70,122)
Unrecognized prior service costs (16,347) -
Unrecognized actuarial gain (loss) (417) 2,612
---------- ----------
Accrued postretirement benefit $ (69,730) $ (67,510)
========== ==========<PAGE>
<PAGE> 27
The postretirement benefit cost components for 1994 were calculated
assuming health care cost trend rates ranging up to 11% for 1994 and
decreasing to 5.5% over 9 to 24 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, 1994 by $12.0 million and the aggregate of the
service and interest cost components of postretirement expense by $1.6
million.
The assumed discount rate used in determining the actuarial present
value of the accumulated postretirement benefit obligation was 8.25% and
7.50% in 1994 and 1993, respectively. Plan assets are primarily invested in
equities 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 for up
to 5% of eligible compensation including 1% for the Employee Stock Ownership
Plan (ESOP). Total contributions were valued at $1.7 million in 1994, $1.8
million in 1993 and $1.6 million in 1992.
D. Employee Stock Ownership Plan
In November 1991, WICOR established an 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.
The ESOP used the proceeds from a $10 million, 3-year adjustable rate
loan with a 6.56% interest rate at December 31, 1994, guaranteed by the
Company, to purchase 431,266 shares of original issue WICOR common stock. The
Company extended the adjustable rate loan, with similar terms, until November
3, 1995. Because the Company has guaranteed the loan, the unpaid balance
($6.4 million) 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 ESOP and with Wisconsin Gas contributions
to the ESOP.
E. Stock Options
The Company has a total of 140 employees participating in one or more
of its common stock option plans. All options, except for 39,783 performance
options granted in 1993, which may vest in 1996, 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. Changes in stock options
outstanding for all plans were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Outstanding at January 1 794,925 763,342 712,392
Granted 135,800 180,350 178,900
Exercised/Canceled (266,092) (148,767) (127,950)
---------- ---------- ----------
Outstanding at December 31 664,633 794,925 763,342
========== ========== ==========
Exercise price per share $ 13.38- $ 10.38- $ 10.38-
$ 30.63 $ 27.31 $ 24.44
Available for future
grant at year-end 743,600 783,116 261,000
/TABLE
<PAGE>
<PAGE> 28
Under the Company's 1994 Long-Term Performance Plan, which was approved
by the shareholders in April 1994, awards up to 820,000 shares of common
stock may be granted. The shares may be granted as incentive stock options,
nonqualified stock options, stock appreciation rights or restricted stock.
Awards of restricted stock subject to performance vesting criteria have
been granted under the 1994 Plan. These awards will vest only if the Company
achieves certain financial goals over the three-year performance periods
1994-96. Recipients of restricted stock awards are not required to provide
consideration to the Company other than rendering service and have the right
to vote the shares and the right to receive dividends thereon.
A total of 23,800 restricted shares (net of cancellations) were issued
in 1994. Initially, the total market value of the shares is treated as
unearned compensation and is charged to expense over the vesting periods. For
both restricted stock and performance option shares, adjustments are made to
expense for changes in market value and achievement of financial goals.
Unearned compensation charged to expense in 1994 was $0.2 million for
performance options and $0.2 million for restricted stock.
F. Postemployment Benefit Plans
Effective January 1, 1994 the Company adopted SFAS No. 112,
"Employers' Accounting for Postemployment Benefits," which requires accrual
for all other postemployment benefits. Total postemployment benefit expense
in 1994 was $0.6 million including a one-time cumulative adjustment. The
incremental costs of adopting this statement are insignificant on an ongoing
basis.
10. 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:
(Thousands of Dollars) 1994 1993
---------------------------- ---------- ----------
Carrying amount $161,669 $165,230
Fair value $159,318 $175,213
11. OTHER FINANCIAL INFORMATION
See page 28 for unaudited quarterly financial data. See Financial
Review on page 19 for industry segment data.<PAGE>
<PAGE> 29
selected financial data -- 1994 to 1991
<TABLE>
<CAPTION>
(Thousands of Dollars,
Except Per Share Amounts) 1994 1993 1992 1991
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Consolidated
Operating Data:
Operating revenues (7) $ 867,755 $ 849,528 $ 747,409 $ 716,767
Net income from continuing
operations $ 33,174 $ 29,313 $ 22,764 $ 22,966
Net income $ 33,174 $ 29,313 $ 14,799 $ 22,966
Common Stock Data:
Net income per share from
continuing operations $ 1.99 $ 1.82 $ 1.47 $ 1.54
Net income per common share (1) $ 1.99 $ 1.82 $ 0.96 $ 1.54
Cash dividends per common share(1) $ 1.58 $ 1.54 $ 1.50 $ 1.46
Book value per common share (1)(4) $ 17.23 $ 16.47 $ 15.60 $ 15.84
Balance Sheet Data:
Long-term debt $ 161,669 $ 165,230 $ 164,171 $ 168,366
Redeemable preferred stock - - - -
Common equity 291,468 270,276 245,287 243,453
--------- --------- --------- ---------
Capitalization at year-end $ 453,137 $ 435,506 $ 409,458 $ 411,819
========= ========= ========= =========
Total assets at year-end (2) $ 930,708 $ 933,726 $ 825,774 $ 670,250
========= ========= ========= =========
Other General Data:
Market-to-book ratio at
year-end (%)(4) 165 191 175 153
Dividend payout ratio (%)(2)(3)(5) 79.6 82.2 96.1 89.0
Yield at year-end (%) 5.6 5.0 5.6 6.1
Return on average common
equity (%)(2)(3)(6) 11.6 11.2 9.2 9.5
Price/earnings ratio at
year-end (2)(3)(4) 14.3 17.3 18.5 15.7
Price range $ 25 1/2- $ 25 5/8- $ 22 7/8- $ 18 5/8-
$ 32 5/8 $ 32 7/8 $ 27 3/8 $ 24 3/8
Shareholders at year-end 16,517 17,091 17,780 18,503
Cash flow from operations $ 103,551 $ 3,401 $ 37,012 $ 50,413
Capital expenditures $ 55,051 $ 51,906 $ 71,873 $ 45,113
Employees at year-end 3,214 3,222 3,178 3,196
Debt/equity ratio at year-end 36/64 38/62 40/60 41/59
Gas Distribution Operations
Operating revenues $ 556,587 $ 574,835 $ 495,415 $ 474,702
Net income $ 18,896 $ 19,870 $ 18,060 $ 17,086
Capital expenditures $ 44,626 $ 42,253 $ 62,125 $ 34,473
Gas sold and transported (thousands
of dekatherms-MDth)
Residential 46,369 47,964 45,905 45,614
Commercial 18,598 19,060 17,840 17,861
Industrial firm 14,544 15,246 14,488 15,690
Industrial interruptible 28,217 20,849 17,388 17,440
Transported 11,908 17,408 21,379 19,658
--------- --------- --------- ---------
119,636 120,527 117,000 116,263
========= ========= ========= =========
/TABLE
<PAGE>
<PAGE> 30
<TABLE>
<CAPTION>
selected financial data -- 1994 to 1991 (continued)
1994 1993 1992 1991
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Customers at year-end 495,129 485,103 470,956 460,549
Customers served per employee 419 352 331 323
Average cost of gas per
Dth purchased $ 3.34 $ 3.76 $ 3.34 $ 3.18
Average annual residential bill $ 719 $ 779 $ 712 $ 677
Average use per residential
customer (Dth) 110 116 115 117
Degree days 6,431 6,775 6,683 6,416
% colder (warmer) than normal (9.0) (4.1) (6.4) (10.8)
Manufacturing Operations (2)(4)
Operating revenues $ 311,168 $ 274,693 $ 251,994 $ 242,065
International and export sales
as a % of total sales 37 34 34 31
Net income (3) $ 14,278 $ 9,443 $ 4,704 $ 5,880
Capital expenditures $ 10,425 $ 9,653 $ 9,748 $ 10,640
/TABLE
<PAGE>
<PAGE> 31
selected financial data 1990 to 1987
<TABLE>
<CAPTION>
(Thousands of Dollars,
Except Per Share Amounts) 1990 1989 1988 1987
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Consolidated
Operating Data:
Operating revenues (7) $ 696,023 $ 741,218 $ 780,633 $ 699,418
Net income from continuing
operations $ 16,651 $ 33,359 $ 30,400 $ 17,215
Net income $ 16,651 $ 33,881 $ 34,163 $ 19,682
Common Stock Data:
Net income per share from
continuing operations $ 1.14 $ 2.30 $ 2.12 $ 1.22
Net income per common share (1) $ 1.14 $ 2.33 $ 2.38 $ 1.39
Cash dividends per common share(1) $ 1.42 $ 1.37 $ 1.32 $ 1.30
Book value per common share(1)(4)$ 16.12 $ 16.83 $ 15.82 $ 14.68
Balance Sheet Data:
Long-term debt $ 130,215 $ 122,639 $ 133,034 $ 127,833
Redeemable preferred stock - - - 8,000
Common equity 237,407 244,351 227,080 207,658
--------- --------- --------- ---------
Capitalization at year-end $ 367,622 $ 366,990 $ 360,114 $ 343,491
========= ========= ========= =========
Total assets at year-end (2) $ 651,559 $ 620,548 $ 565,967 $ 536,998
========= ========= ========= =========
Other General Data:
Market-to-book ratio at
year-end (%)(4) 122 148 123 117
Dividend payout ratio (%)(2)(3)(5) 117.2 55.0 52.0 91.1
Yield at year-end (%) 7.3 5.6 6.9 7.6
Return on average common
equity (%)(2)(3)(6) 6.8 14.3 15.3 9.3
Price/earnings ratio at
year-end (2)(3)(4) 17.2 10.7 8.2 12.4
Price range $ 181/4- $ 19 3/8- $ 15 5/8- $ 13 3/8-
$ 251/4 $ 25 3/8 $ 20 7/8 $ 21 7/8
Shareholders at year-end 19,463 20,509 21,611 23,010
Cash flow from operations $ 10,022 $ 94,623 $ 73,526 $ 41,237
Capital expenditures $ 37,529 $ 40,944 $ 48,295 $ 34,264
Employees at year-end 3,152 3,696 3,927 4,040
Debt/equity ratio at year-end 35/65 33/67 37/63 37/63
Gas Distribution Operations
Operating revenues $ 455,559 $ 441,477 $ 476,904 $ 424,069
Net income $ 13,195 $ 25,169 $ 23,223 $ 12,580
Capital expenditures $ 27,978 $ 25,813 $ 37,148 $ 24,344
Gas sold and transported
(thousands of dekatherms-MDth)
Residential 43,020 48,154 46,769 39,369
Commercial 16,319 18,089 17,012 14,510
Industrial firm 15,106 16,915 16,808 16,106
Industrial interruptible 16,620 5,475 3,752 4,714
Transported 16,565 29,158 29,639 26,129
--------- --------- --------- ---------
107,630 117,791 113,980 100,828
========= ========= ========= =========
/TABLE
<PAGE>
<PAGE> 32
<TABLE>
<CAPTION>
selected financial data -- 1990 to 1987 (continued)
1990 1989 1988 1987
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Customers at year-end 452,906 445,771 439,063 432,509
Customers served per employee 321 319 311 288
Average cost of gas per
Dth purchased $ 3.30 $ 3.15 $ 3.68 $ 3.74
Average annual residential bill $ 670 $ 758 $ 770 $ 660
Average use per residential
customer (Dth) 113 129 127 108
Degree days 6,103 7,382 7,124 6,185
% colder (warmer) than normal (16.0) 1.5 (2.0) (14.8)
Manufacturing Operations (2)(4)
Operating revenues $ 240,464 $ 300,156 $ 303,729 $ 275,349
International and export sales
as a % of total sales 27 24 22 20
Net income (3) $ 3,456 $ 8,712 $ 10,940 $ 7,102
Capital expenditures $ 9,551 $ 15,131 $ 11,147 $ 9,920
/TABLE
<PAGE>
<PAGE> 33
selected financial data -- 1986 to 1984
<TABLE>
<CAPTION>
(Thousands of Dollars,
Except Per Share Amounts) 1986 1985 1984
--------- --------- ---------
<S> <C> <C> <C>
Consolidated
Operating Data:
Operating revenues (7) $ 761,104 $ 853,175 $ 839,965
Net income from continuing operations $ 17,363 N/A N/A
Net income $ 19,780 $ 24,900 $ 24,145
Common Stock Data:
Net income per share from
continuing operations $ 1.34 N/A N/A
Net income per common share (1) $ 1.53 $ 1.98 $ 1.95
Cash dividends per common share (1) $ 1.28 $ 1.18 $ 1.11
Book value per common share (1)(4) $ 15.74 $ 13.81 $ 12.97
Balance Sheet Data:
Long-term debt $ 144,495 $ 154,159 $ 131,750
Redeemable preferred stock 14,267 18,200 19,000
Common equity 203,477 173,941 160,690
--------- --------- ---------
Capitalization at year-end $ 362,239 $ 346,300 $ 311,440
========= ========= =========
Total assets at year-end (2) $ 542,036 $ 531,192 $ 499,734
Other General Data:
Market-to-book ratio at year-end (%)(4) 134 112 104
Dividend payout ratio (%)(2)(3)(5) 79.9 57.0 54.0
Yield at year-end (%) 6.1 7.6 8.3
Return on average common equity (%)(2)(3)(6) 10.5 14.6 15.1
Price/earnings ratio at year-end (2)(3)(4) 13.8 7.8 6.9
Price range $ 14 3/4- $ 13- $ 10 1/8-
$ 23 $ 15 3/4 $ 13 7/8
Shareholders at year-end 23,987 26,083 28,581
Cash flow from operations $ 63,583 $ 46,342 $ 45,801
Capital expenditures $ 36,498 $ 32,381 $ 32,273
Employees at year-end 3,932 3,641 3,513
Debt/equity ratio at year-end 40/60 45/55 42/58
Gas Distribution Operations
Operating revenues $ 531,970 $ 637,167 $ 640,508
Net income $ 14,338 $ 17,460 $ 17,348
Capital expenditures $ 28,353 $ 23,208 $ 22,161
Gas sold and transported (thousands
of dekatherms-MDth)
Residential 42,837 44,813 43,961
Commercial 15,292 16,394 15,007
Industrial firm 19,379 22,541 22,969
Industrial interruptible 22,403 31,675 34,056
Transported 5,502 1,716 -
--------- --------- ---------
105,413 117,139 115,993
========= ========= =========
Customers at year-end 426,481 420,967 415,297
Customers served per employee 277 279 268
Average cost of gas per Dth purchased $ 3.75 $ 4.13 $ 4.16
Average annual residential bill $ 761 $ 838 $ 849
Average use per residential customer (Dth) 120 128 127
Degree days 6,788 7,325 6,844
% colder (warmer) than normal (7.3) (0.5) (7.0)
Manufacturing Operations (2)(4)
Operating revenues $ 229,134 $ 216,008 $ 199,457
International and export sales
as a % of total sales 16 12 14
Net income (3) $ 5,442 $ 7,440 $ 6,797
Capital expenditures $ 8,145 $ 9,173 $ 10,112
/TABLE
<PAGE>
<PAGE> 34
(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.
(7) Includes revenues (in thousands) from discontinued operations from 1986
to 1989 of $58,209, $58,318, $63,552 and $56,318, respectively. Data
from 1985 and 1984 is not available.
N/A - Data not available.<PAGE>
<PAGE>
<PAGE> 1
EXHIBIT 21
<TABLE>
<CAPTION>
WICOR, Inc.
Subsidiaries of the Registrant
State or Country Percent Voting
Subsidiaries of WICOR, Inc. in Which Incorporated Stock Owned
---------------------------------- --------------------- --------------
<S> <C> <C>
Wisconsin Gas Company Wisconsin 100%
Sta-Rite Industries, Inc. Wisconsin 100%
SHURflo Pump Manufacturing Company California 100%
WEXCO of Delaware, Inc. Delaware 100%
WICOR FSC, Inc. Barbados 100%
Subsidiaries of Sta-Rite
Industries
-----------------------------------
WICOR Canada Inc. Canada 100%
Sta-Rite de Mexico Mexico 80%
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%
Subsidiary of WICOR
(Australia) Pty. Ltd
----------------------------------
Onga Pty. Ltd. Australia 100%
Dega Research Pty. Ltd. Australia 100%
Subsidiaries of Sta-Rite
Holdings, B.V.
----------------------------------
Sta-Rite Industries Germany 95.5%
GmbH Europa
Nocchi Pompe S.p.A. Italy 30%
Subsidiary of Nocchi Pompe,
S.p.A.
----------------------------------
Midi Pompes S.a.r.l. France 100%
Nocchi Pompe Moscow Russia 90%
Subsidiary of SHURflo Pump
Manufacturing Company
----------------------------------
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, 33-67134 and 33-55755) and Form S-3 (Nos. 33-
28289, 33-50682 and 33-50781).
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
March 13, 1995<PAGE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the WICOR,
Inc. Form 10-K for the year ended December 31, 1994 and is qualified inits
entirety by reference to such financial statements and the related footnotes.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 362,955
<OTHER-PROPERTY-AND-INVEST> 52,608
<TOTAL-CURRENT-ASSETS> 312,300
<TOTAL-DEFERRED-CHARGES> 202,845
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 930,708
<COMMON> 16,918
<CAPITAL-SURPLUS-PAID-IN> 180,000
<RETAINED-EARNINGS> 94,550
<TOTAL-COMMON-STOCKHOLDERS-EQ> 291,468
0
0
<LONG-TERM-DEBT-NET> 161,669
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 135,000
<COMMERCIAL-PAPER-OBLIGATIONS> 94,571
<LONG-TERM-DEBT-CURRENT-PORT> 5,031
0
<CAPITAL-LEASE-OBLIGATIONS> 1,222
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 377,969
<TOT-CAPITALIZATION-AND-LIAB> 930,708
<GROSS-OPERATING-REVENUE> 867,755
<INCOME-TAX-EXPENSE> 17,312
<OTHER-OPERATING-EXPENSES> 801,145
<TOTAL-OPERATING-EXPENSES> 818,457
<OPERATING-INCOME-LOSS> 49,298
<OTHER-INCOME-NET> 574
<INCOME-BEFORE-INTEREST-EXPEN> 49,872
<TOTAL-INTEREST-EXPENSE> 16,698
<NET-INCOME> 33,174
0
<EARNINGS-AVAILABLE-FOR-COMM> 33,174
<COMMON-STOCK-DIVIDENDS> 26,399
<TOTAL-INTEREST-ON-BONDS> 1,340
<CASH-FLOW-OPERATIONS> 103,551
<EPS-PRIMARY> 1.99
<EPS-DILUTED> 1.99
</TABLE>
<PAGE>
<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the
Securities Exchange Act of 1934
(Amendment No. ____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
WICOR, Inc.
-----------------------------------------------
(Name of Registrant as Specified in its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:<PAGE>
<PAGE> 2
WICOR
626 East Wisconsin Avenue
P.O. Box 334
Milwaukee, WI 53201
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 27, 1995
To the Shareholders of
WICOR, Inc.:
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of Shareholders of
WICOR, Inc. will be held Thursday, April 27, 1995, 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 1998 Annual
Meeting of Shareholders and until their successors are duly
elected and qualified.
2. 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 Friday, February 17, 1995, 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, 1995
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> 3
WICOR
626 East Wisconsin Avenue
P.O. Box 334
Milwaukee, Wisconsin 53201
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 27, 1995
This Proxy Statement is being furnished to shareholders by the Board of
Directors of WICOR, Inc. (the "Company") beginning on or about March 10,
1995, 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 27, 1995, 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 17, 1995, are entitled
to vote at the Annual Meeting and at any adjournment thereof. On that date,
the Company had outstanding and entitled to vote 16,933,944 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 Manufacturing Co. ("SHURflo").
ITEM NO. 1: ELECTION OF DIRECTORS
The Board consists of 10 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 1998 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.
However, abstentions and broker non-votes are counted in determining whether
a quorum is present at the meeting.
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 six 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.
<PAGE>
<PAGE> 4
A photograph of each director and director continuing in office
appears adjacent to the nominee's/director's name and personal information.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
For Three-Year Terms Expiring April, 1998
WENDELL F. BUECHE Mr. Bueche, 64, is the Chairman, Chief
Compensation (Chairman) Executive Officer and a director of
and Retirement Plans IMC Global, 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. Mr. Bueche is a
director of Marshall & Ilsley
Corporation and M&I Marshall & Ilsley
Bank.
DANIEL F. McKEITHAN, JR. Mr. McKeithan, 59, is President, Chief
Compensation and Retirement Executive Officer and a director of
Plans Investment Committees Tamarack Petroleum Company, 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, 59, is President and
Nominating Committee Chief Executive Officer of the
Director since 1992 Company and Chairman of Wisconsin Gas,
Sta-Rite and SHURflo. He has held
these positions since 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, 46, 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 care
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.
<PAGE>
<PAGE> 5
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
Terms Expiring April, 1996
JERE D. McGAFFEY Mr. McGaffey, 59, is a partner in the
Nominating (Chairman) and law firm of Foley & Lardner. (1) He
Retirement Plans Investment has been in practice with that firm
Committees since 1961 and has been a partner
Director since 1980 since 1968. Mr. McGaffey is a
director of Smith Investment Company.
THOMAS F. SCHRADER Mr. Schrader, 45, 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, 66, served as Chairman
Audit and Nominating and Chief Executive Officer of the
Committees Company from 1986 until his retirement
Director since 1980 in February 1994. He is a director of
Marshall & Ilsley Corporation, M&I
Marshall & Ilsley Bank, Modine
Manufacturing Co. and Twin Disc Inc.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
Terms Expiring April, 1997
WILLIE D. DAVIS Mr. Davis, 60, 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., Rally's Hamburgers, Inc., Sara
Lee Corporation and Strong Cornelius
Capital Management, Inc.
GUY A. OSBORN Mr. Osborn, 59, 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., and is a Trustee of
Northwestern Mutual Life Insurance
Company.
<PAGE>
<PAGE> 6
WILLIAM B. WINTER Mr. Winter, 66, is Retired Chairman,
Nominating and Retirement Chief Executive Officer and Director
Plans Investment of Bucyrus-Erie Company, a
(Chairman) Committees manufacturer of mining machinery, and
Director since 1980 its parent corporation B-E Holdings
Inc. (2). He joined Bucyrus-Erie in
1953 and was Chairman and Chief
Executive Officer from 1988 until his
retirement in 1994.
(1) Foley & Lardner was retained in 1994 by the Company and its
subsidiaries to provide legal services and has been similarly retained
in 1995.
(2) 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. On December 1, 1994, the Bankruptcy Court
approved the plan of reorganization. The companies were released from
bankruptcy on December 14, 1994.
THE BOARD OF DIRECTORS
General
-------
The Board held eight meetings in 1994. 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 1994. 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 1994. 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 Share-
holders and recommending the person to fill any unexpired term on the Board
which may occur. The committee will consider nominees recommended by share-
holders, but has no established procedures which must be followed to make
recommendations.
The Compensation Committee held three meetings in 1994. 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, the 1994 Long-Term Performance Plan and the
other incentive compensation plans of the Company and its subsidiaries.
Compensation of Directors
-------------------------
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.<PAGE>
<PAGE> 7
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 22, 1994, Messrs.
Bueche, Davis, McGaffey, McKeithan, Osborn, Tisdale and Winter and Ms.
Whitelaw each received an option to purchase 2,000 shares of Common Stock at
a per-share exercise price of $30.4375. 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 28,
1995, 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
$28.75.
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.
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, 1995, 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>
Amount and Nature
Title of Name of of Beneficial Percent of
Class Beneficial Owner Ownership (1)(2)(3) Class (4)
------------ -------------------- --------------------- ----------
<S> <C> <C> <C>
Common Stock Wendell F. Bueche 8,359 -
Willie D. Davis 6,500 -
James C. Donnelly 56,956 -
Jere D. McGaffey 8,908 -
Daniel F. McKeithan,Jr. 7,000 -
Robert A. Nuernberg 44,213 -
Guy A. Osborn 8,000 -
Thomas F. Schrader 108,232 -
Stuart W. Tisdale 135,506 (5) -
George E. Wardeberg 40,917 -
Joseph P. Wenzler 116,175 (6) -
Essie M. Whitelaw 6,000 -
William B. Winter 8,553 -
All directors and 553,319 3.3%
executive officers as
a group (13 persons)
/TABLE
<PAGE>
<PAGE> 8
(1) Each beneficial owner exercises sole voting and investment power with
respect to the shares shown as owned beneficially, except as noted in
footnotes (3), (5) and (6).
(2) Includes the following numbers of shares covered under options
exercisable as of or within 60 days of February 28, 1995: Mr.
Donnelly, 51,483; Mr. Nuernberg, 34,766; Mr. Schrader, 79,133; Mr.
Wardeberg, 7,000; Mr. Wenzler, 74,100; Mr. Tisdale, 4,000; Messrs
Bueche, Davis, McGaffey, McKeithan, Osborn and Winter and Ms. Whitelaw,
6,000 each; and all directors and executive officers as a group,
265,400.
(3) Includes the following numbers of shares of restricted stock over which
the holders have sole voting but no investment power: Mr. Donnelly,
4,000; Mr. Nuernberg, 800; Mr. Schrader, 4,000; Mr. Wardeberg, 6,000;
and Mr. Wenzler, 3,000; and all directors and executive officers as a
group, 17,800. The restricted stock vests in 1997 if the Company's
total return to shareholders for the three-year period 1994-96 exceeds
a pre-established goal.
(4) Where no percentage figure is set out in this column, the person owns
less than 1% of the outstanding shares.
(5) Includes 4,852 shares owned by Mr. Tisdale's spouse.
(6) 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 persons who served as Company's chief
executive officer during 1994 and each of the Company's four other most
highly compensated executive officers whose total cash compensation exceeded
$100,000 in 1994.
<PAGE>
<PAGE> 9
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation Awards
--------------------------------------- -------------------------
Securities
Other Annual Restricted Underlying All Other
Name and Principal Compensation Stock Options/ Compensation
Position Year Salary($) Bonus($) ($)(1) Awards($)(2) SARs(#) ($) (3)
-------------------------------- ---- ---------- ----------- ------------ ------------ ---------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Stuart W. Tisdale, Chairman 1994 $106,681(5) $ 33,538 $ 25,170 $ 0 $ 2,302
and Chief Executive Officer of 1993 488,750 244,375 26,100 19,533
the Company and Chairman of 1992 470,000 145,000 25,000 14,574
Wisconsin Gas, Sta-Rite
and SHURflo (4)
George E.Wardeberg, President and 1994 327,500 113,200 $ 185,250 15,000 19,241
Chief Executive Officer of the 1993 272,000 150,000 52,459 18,000 16,257
Company and Chairman of Wiscon- 1992 220,567 37,825 6,000 4,364
sin Gas, Sta-Rite and SHURflo(6)
Thomas F. Schrader, Vice President 1994 264,925 65,163 123,500 10,000 16,112
of the Company and President and 1993 260,000 142,881 10,500 15,192
Chief Executive Officer of 1992 248,500 75,000 13,200 13,776
Wisconsin Gas
James C. Donnelly, Vice President 1994 251,633 105,020 123,500 10,000 15,848
of the Company and President and 1993 236,250 110,174 7,950 15,203
Chief Executive Officer of 1992 208,725 35,163 8,850 13,011
Sta-Rite
Joseph P. Wenzler, Vice President, 1994 252,650 69,800 92,625 7,500 15,498
Treasurer and Chief Financial 1993 245,300 100,629 9,750 15,131
Officer of the Company; Vice 1992 245,300 33,695 13,200 6,171
President and Chief Financial
Officer of Wisconsin Gas; and
Secretary and Treasurer of
SHURflo (7)
Robert A. Nuernberg, Secretary 1994 133,000 7,000 24,700 2,000 9,516
of the Company; Vice President- 1993 131,000 25,000 3,000 9,416
Corporate Relations and 1992 127,000 16,500 4,500 9,216
Secretary of Wisconsin Gas
/TABLE
<PAGE>
<PAGE> 10
(1) The amount reported in this column for Mr. Tisdale represents
financial planning services. 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.
Tisdale in 1992 and 1993, did not exceed the lesser of $50,000 or
10% of each officer's annual salary and bonuses reported in the
table for any of the years indicated, except Mr. Wardeberg in 1993.
(2) The amounts in the table reflect the market value on the date of
grant of restricted stock awarded under the 1994 Long-Term
Performance Plan. The number of shares of restricted stock held by
the executive officers named in the table and the market value of
such shares as of December 31, 1994, were as follows: Mr.
Wardeberg, 6,000 shares, $170,250; Messrs. Schrader and Donnelly,
4,000 shares, $113,500; Mr. Wenzler, 3,000 shares, $85,125; and Mr.
Nuernberg, 800 shares, $22,700. The restricted stock vests in 1997
provided the Company's three-year (1994-96) total return to
shareholders exceeds a pre-established goal. Holders of shares of
restricted stock are entitled to receive dividends on such shares.
(3) The amounts shown in this column for 1994 are comprised of the
following items: Company contributions to 401(k) and supplemental
savings plans: Mr. Tisdale $2,063; Mr. Wardeberg $16,375; Mr.
Schrader $13,246; Mr. Donnelly $12,982; Mr. Wenzler $12,632; and Mr.
Nuernberg, $6,650. Supplemental medical insurance premium: Mr.
Tisdale $239; Mr. Wardeberg $2,866; Mr. Schrader $2,866; Mr.
Donnelly $2,866; Mr. Wenzler $2,866; and Mr. Nuernberg, $2,866.
(4) Mr. Tisdale retired as an executive officer of the Company on
February 1, 1994.
(5) Includes vacation pay accrued but unused in 1994.
(6) On February 1, 1994, Mr. Wardeberg was elected as President and
Chief Executive Officer of the Company and as Chairman of Wisconsin
Gas, Sta-Rite and SHURflo.
(7) Mr. Wenzler was elected Secretary and Treasurer of SHURflo on July
28, 1994.
Stock Option Information
------------------------
The Company has in effect equity plans pursuant to which options to
purchase Common Stock may be granted to key employees (including executive
officers) of the Company and its subsidiaries. The following tabulation sets
forth information regarding grants of options made by the Company in 1994 to
the executive officers named in the Summary Compensation Table. No SARs were
awarded in 1994.
OPTION/SAR GRANTS IN 1994 FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------------------------------------------
Percent of Total
Number of Sec. Options Granted Exercise or Grant Date
Under. Opt./SARs to Employees Base Price Expiration Present
Name Granted (#)(1) in Fiscal Year ($/sh.) Date Value(2)
------------------- ---------------- ---------------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C>
Stuart W. Tisdale 2,000 (3) 0 $ 30.4375 2/22/04 $ 8,200
George E. Wardeberg 15,000 12.7 30.625 2/23/04 61,500
Thomas F. Schrader 10,000 8.5 30.625 2/23/04 41,000
James C. Donnelly 10,000 8.5 30.625 2/23/04 41,000
Joseph P. Wenzler 7,500 6.4 30.625 2/23/04 30,750
Robert A. Nuernberg 2,000 1.7 30.625 2/23/04 8,200
/TABLE
<PAGE>
<PAGE> 11
(1) The options reflected in the table (which are nonstatutory stock
options for purposes of the Internal Revenue Code) were granted on
February 22, 1994 and vest ratably over the three-year period from the
date of grant.
(2) Amounts in this column were calculated using the Black-Scholes option
pricing model. The model assumes: (a) an option term of 10 years;
(b) a risk-free interest rate of 6.5%; (c) volatility (variance of
rate of return) of .1828; (d) an annual discount of 3% over the
vesting period for the risk of forfeiture; and (e) a dividend yield of
5.87%. The actual value, if any, that an optionee may realize upon
exercise will depend upon the excess of the price of the Common Stock
over the option exercise price on the date that the option is
exercised. There is no assurance that the value received by the
optionee will be at or near the value estimated by the Black-Scholes
model.
(3) These options were granted to Mr. Tisdale, in his capacity as a
director, under the 1992 Director Stock Option Plan. See Compensation
of Directors. Mr. Tisdale received no options in 1994 in his capacity
as an executive officer of the Company, as he retired as an executive
officer on February 1, 1995.
The following tabulation sets forth information regarding the exercise
of stock options during 1994 and the unexercised options held at December 31,
1994, by each of the executive officers named in the Summary Compensation
Table.<PAGE>
<PAGE> 12
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN 1994 FISCAL YEAR, AND FY-END OPTION/SAR VALUES
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 107,592 $ 553,659 2,000 0 $ 0 $ 0
George E. Wardeberg 0 0 0 23,000 0 14,256
Thomas F. Schrader 3,000 50,438 72,400 17,900 516,468 21,044
James C. Donnelly 0 0 45,200 15,600 312,706 14,431
Joseph P. Wenzler 2,600 33,069 67,200 15,150 467,721 20,778
Robert A. Nuernberg 5,000 86,875 32,600 4,500 260,256 8,031
</TABLE>
<PAGE>
<PAGE> 13
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.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
Years of Service
---------------------------------------------------------
Remuneration 15 20 25 30 35
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 200,000 $ 58,561 $ 78,081 $ 89,341 $ 92,341 $ 95,341
250,000 73,411 97,881 111,991 115,741 119,491
300,000 88,261 117,681 134,641 139,141 143,641
350,000 103,111 137,481 157,291 162,541 167,791
400,000 117,961 157,281 179,941 185,941 191,941
450,000 132,811 177,081 202,591 209,341 216,091
500,000 147,661 196,881 225,241 232,741 240,241
550,000 162,511 216,281 247,891 256,141 264,391
600,000 177,361 236,481 270,541 279,541 288,541
</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.
Wardeberg, Schrader, Donnelly, Wenzler and Nuernberg have 5, 16, 7, 21 and 25
years, respectively, of credited service under the pension plan. Mr.
Tisdale, who retired February 1, 1994, receives retirement benefits computed
under the benefit formula based on 30 years of credited service. Pursuant to
a supplemental retirement plan, Messrs. Schrader and Nuernberg will receive a
supplemental retirement benefit of $25,000 per year for 15 years beginning at
age 65, payable in monthly installments.
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.<PAGE>
<PAGE> 14
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 three independent, non-employee directors. Following Compensation
Committee review and approval, matters relating to executive compensation
(other than the grant of stock options and restricted stock) 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 and weigh in their judgment 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.
Base salary midpoints, annual incentive targets and long-term incentive
grants are set based on a competitive analysis conducted by the independent
compensation consultant. As indicated above, compensation opportunities, by
component and in the aggregate, are set at or near the 50th percentile of
competitive practice for comparably sized organizations. Rates for the gas
utility positions are set using survey sources from the utility industry.
There is substantial overlap between the companies in these surveys and the
companies used in the peer company index in the Performance Graph. Rates for
the nonutility positions are set using survey sources from general industry;
there is no overlap with the Performance Graph peer companies here.
Components of Compensation
--------------------------
Base salary -- The Compensation Committee targets salary range
midpoints as indicated above. Individual salaries range above and below the
midpoint based upon an individual's past and current performance, and
expectations for future performance. The factors considered in this review
are job specific and vary depending on the individual's position. There is
no specific weighting given to these factors.
<PAGE> 15
Annual incentive plan -- The Company's annual incentive compensation
plan tailors each officer's incentive potential to that officer's Company and
subsidiary responsibilities. The plan sets incentive targets ranging from
20% to 50% of base salary. The plan is designed to compensate the officers
primarily on a formula basis. For the Chief Executive Officer and the Chief
Financial Officer, the formula bases 75% of the targeted award on the
Company's earnings per share (EPS) and 25% on individual performance
objectives. For Company Vice Presidents, who are also the subsidiary
presidents, the formula bases 25% of the targeted award on the Company's EPS,
25% on individual performance objectives, and 50% on subsidiary performance
objectives. Subsidiary performance objectives for Wisconsin Gas include
financial, customer service and safety objectives (weighted at 67% of this
component) and financial objectives (weighted at 33%). Performance
objectives for Sta-Rite include net earnings (weighted at 67% of this
component) and return on assets (weighted at 33%). Individual performance
objectives vary among the officers, but may include such things as cost
management, product development, sales growth, personnel management and
development, and management of specific projects. The Compensation Committee
exercises its judgment on a case-by-case basis in determining the weight to
be accorded any individual performance objective.
Long-term incentive plan -- The Company's long-term incentive
compensation plan provides for annual awards of stock options and biennial
awards of performance-based restricted stock. The plan splits an officer's
long-term incentive opportunity equally (based on value) between stock
options and performance-based restricted stock. The independent compensation
consultant provides the Compensation Committee with a long-term incentive
grant schedule that approximates a market median grant opportunity. The
Compensation Committee reserves the right to adjust this schedule upward or
downward based on Company performance; however, it is the Compensation
Committee's intention that in most cases grants will be provided at targeted
levels.
Stock options may be incentive stock options or nonstatutory options
which have a term of not more than ten years and have an exercise price equal
to the fair market value on the date of grant. The Compensation Committee
determines the manner and conditions under which the options become
exercisable. The number of options granted is based on the participant's
office or position, with an equal number of shares generally being granted to
individuals holding the same or similar positions, such as vice president of
an operating subsidiary. Performance-based restricted stock will vest three
years from the year of grant provided the Company's three-year total return
to shareholders equals or exceeds pre-established goals relative to the
Performance Graph peer group (the Paine Webber Gas Distribution Utility
Index). For other subsidiary officers who participate in the plan, the
restricted stock will vest in three-years provided the appropriate
subsidiary's three-year financial performance (three-year cumulative earnings
for Wisconsin Gas and return on assets for Sta-Rite) equals or exceeds the
pre-established goal.
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. The Compensation Committee weighs
the financial measures differently for each officer, in recognition that the
Company's principal subsidiaries operate in different industries with
different compensation practices and that the officers' responsibilities
differ. 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. Examples of personal performance
objectives considered by the Compensation Committee are set out above in<PAGE>
<PAGE> 16
the discussion of the Annual Incentive Plan. The Compensation Committee
exercises its judgment in determining the relative weight to be accorded each
personal objective.
As stated above, each officer's annual incentive award, if any, is
based on a formula, although the Compensation Committee exercises its
judgment in determining the weights to be accorded the achievement of
personal objectives. Long-term incentive awards (stock options and
restricted stock) are also formula-based, with individual awards being set
relative to the officer's position. The specific number of stock options
awarded is based on the number of options to be awarded to all key employees
of the Company and its subsidiaries and the number of options previously
granted and outstanding, as determined by the Compensation Committee.
Options granted in 1994 were non-statutory, have a term of ten years, and
first become exercisable one-third each year on the first, second and third
anniversary of the grant. Restricted stock grants were made at the targeted
amounts.
Compensation of the Chief Executive Officer
-------------------------------------------
Stuart W. Tisdale served as the Company's Chief Executive Officer until
February 1, 1994. Mr. Tisdale received no long-term incentive award or any
increase in base salary in 1994. He received a prorated annual incentive
award of $33,538.
For 1994, the Compensation Committee increased the base salary of
George E. Wardeberg, the Company's Chief Executive Officer beginning February
1, 1994, by $78,000 or 29% effective April 1, 1994. The increase reflects
his increased responsibilities as Chief Executive Officer, his overall
performance, as demonstrated by the increase in the Company's total return to
shareholders in 1993 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. Wardeberg's salary in the first quartile of the
range targeted by the Compensation Committee.
The Compensation Committee awarded Mr. Wardeberg 15,000 nonstatutory
stock options and 6,000 shares of performance-based restricted stock in 1994.
The number of options and the number of shares of restricted stock awarded
were at the targeted number established in the long-term incentive
compensation plan.
The annual incentive award to Mr. Wardeberg for 1994 was $113,200, or
35% of his salary as compared to a target of 50% of salary. This award
reflects Mr. Wardeberg's contributions to the Company during 1994. The less
than targeted incentive award was caused by certain financial objectives not
being met due to weather that was 9% warmer than normal. This resulted in
less than targeted earnings at the Company's gas distribution operation.
However, the Company's manufacturing operations had a strong year with net
earnings up 51% for the year. As a result, WICOR's net earnings and earnings
per share increased 13% and 9%, respectively. WICOR also outperformed its
industry peers, achieving a total return to shareholders ranking in the top
third nationwide. In addition, Mr. Wardeberg accomplished his personal
objectives in the areas of growth, human resources and preserving the
Company's financial strength. The Compensation Committee exercised its
judgment in determining the weights accorded to his accomplishment of these
personal objectives.
Compliance with Tax Regulations
-------------------------------
The Company has considered the implications of the 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 most of the
components of compensation described above are consistent with the tax rules
regarding performance-based compensation incentives.<PAGE>
<PAGE> 17
The Compensation Committee did, however, seek qualification of the
stock components of the program as "performance-based compensation" plans
pursuant to these tax rules. To that end, proposals were included in the
1994 Proxy Statement establishing a per-person limitation for stock option
and restricted stock awards. The proposals were approved by the
shareholders.
Wendell F. Bueche, Chairman
Daniel F. McKeithan, Jr.
Guy A. Osborn
Members of the Compensation Committee
<PAGE>
<PAGE> 18
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 Paine Webber Gas
Distribution Utility Index, comprised of 35 U.S. natural gas distribution
utilities. The Paine Webber index is identical to the Kidder, Peabody Gas
Distribution Utility Index used by the Company in prior years. The name
change reflects the acquisition of Kidder, Peabody by Paine Webber in 1994.
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 Paine Webber Gas Distribution Utility Index
Measurement Period - FYE
Measurement Point - December 31, 1988
<TABLE>
<CAPTION>
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
Paine Webber $ 100 $ 134 $ 130 $ 149 $ 175 $ 199
</TABLE>
SHAREHOLDER PROPOSALS
Proposals which shareholders of the Company intend to present at the 1996
Annual Meeting of Shareholders must be received by the Company by the close
of business on November 19, 1995.
OTHER MATTERS
Arthur Andersen LLP was retained as the Company's independent auditors for
the year ended December 31, 1994 and, upon the recommendation of the Audit
Committee, the Board has reappointed Arthur Andersen as independent public
accountants for the Company for the year ending December 31, 1995. A
representative of Arthur Andersen 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, 1995, an annual report on Form 10-K for the fiscal year
ended December 31, 1994. 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.<PAGE>
<PAGE> 19
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 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
March 10, 1995 Secretary<PAGE>
<PAGE> 20
APPENDIX I
WICOR VOTER AUTHORIZATION CARD
[X] Please mark your
votes as this
WICOR
VOTING AUTHORIZATION
----------------------------------------------------------------------------
The Board of Directors recommends a vote FOR all nominees in Item 1.
----------------------------------------------------------------------------
1. Election of the following nominees as directors for three-year terms:
Wendell F. Bueche, Daniel F. McKeithan, Jr., George E. Wardeberg and
Essie M. Whitelaw
FOR all nominees WITHHOLD
(except as marked AUTHORITY
to the contrary) to vote for all nominees
/ / / /
(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 9, 1995
Dear WICOR Shareholder:
Enclosed is a notice of WICOR's annual shareholders meeting, coming up
April 27, 1995, in Milwaukee. Also enclosed is a proxy statement and voting
authorization card. You have already received a copy of the 1994 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 17, 1995, 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 the Trustee in the enclosed envelope.
Thank you,
Sincerely,
Robert A. Nuernberg
Secretary<PAGE>
<PAGE> 21
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.
--- (BACKSIDE OF VOTER AUTHORIZATION FORM) ---
WICOR
VOTING AUTHORIZATION
The undersigned acknowledges receipt of the WICOR, Inc. Annual Report for
1994 and the proxy solicitation material relative to the Annual Meeting of
Shareholders of WICOR, Inc. to be held April 27, 1995. 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, or held by M and I Marshall and Ilsley Bank, the trustee under
the Sta-Rite Industries' Incentive 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 27, 1995.
(continued on the reverse side)
<PAGE>
<PAGE> 22
APPENDIX II
COMMON STOCK PROXY CARD
/X/ Please mark your
votes as this
WICOR
PROXY
------------------------------------------------------------------------
The Board of Directors recommends a vote FOR all nominees in Item 1.
------------------------------------------------------------------------
1. Election of the following nominees as directors for three-year terms:
Wendell F. Bueche, Daniel F. McKeithan, Jr., George E. Wardeberg and
Essie M. Whitelaw
FOR all nominees WITHHOLD
(except as marked AUTHORITY
to the contrary) to vote for all nominees
/ / / /
(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 9, 1995
Dear WICOR Shareholder:
We're pleased to send you the enclosed 1994 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 27, 1995. This year's meeting will be held at 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, discuss 1994 performance and talk
about the future. 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 27.
Sincerely,
George E. Wardeberg
President and Chief Executive Officer<PAGE>
<PAGE> 23
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 27, 1995, 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 in the
discretion of the proxies on any other items of business as may properly
arise at the meeting.
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 27, 1995.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH HERE
Map of downtown Milwaukee, Wisconsin, showing
location of annual meeting.
<PAGE>
<PAGE> 24
APPENDIX III
Proxy cover letter to Sta-Rite employees.
March 10, 1995
Dear Incentive Savings Plan Participant:
This year, for the first time, employees who hold WICOR stock through
Sta-Rite's 401K (Incentive Savings Plan) are receiving the enclosed WICOR
Proxy statement and Voter Authorization Card. These materials make it
possible for you to vote your stock at WICOR's annual meeting, which will be
held at the Italian Community Center in Milwaukee on April 27.
I encourage you to exercise your right to vote by filling out the
authorization card and returning it as soon as you can. The card allows the
Trustee of your shares to vote the shares on your behalf as you direct.
This year, as you will notice on the Voter Authorization Card, four of the
ten directors on the WICOR Board of Directors are up for reelection to the
board. A complete list of board members appears in the enclosed proxy
statement and in the annual report, which you should have already received.
The report also contains a variety of significant financial data and other
important information about our parent company and its subsidiaries,
including Sta-Rite.
As the accompanying letter from Mr. Nuernberg says, your vote is important.
I hope you will return your signed voting authorization card today.
Thank you.
Sincerely,
Jim Donnelly
President and CEO<PAGE>
