<PAGE>
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1998
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
Milwaukee, Wisconsin 53202
--------------------------------------- ----------
(Address of principal executive office) (Zip Code)
(414) 291-7026
----------------------------------------------------
(Registrant's telephone number, including area code)
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.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at October 16, 1998
- -------------------------- -------------------------------
Common Stock, $1 Par Value 37,344,914
<PAGE>
<PAGE> 2
INTRODUCTION
WICOR, Inc. ("WICOR" or the "Company") is a diversified holding company
with two principal business groups: an Energy Group responsible for
natural gas distribution and related services, and a Manufacturing Group
responsible for the manufacture of pumps and processing equipment used to
pump, control, transfer, hold and filter water and other fluids. The
Company engages in natural gas distribution through its subsidiary,
Wisconsin Gas Company ("Wisconsin Gas"), the oldest and largest natural
gas distribution utility in Wisconsin. Through several nonutility
subsidiaries, the Company also engages in the manufacture and sale of
pumps and processing equipment. The Company's manufactured products
primarily have water system, pool and spa, agricultural, RV/marine and
beverage/food service applications. The Company markets its manufactured
products in about 100 countries. The Company is incorporated under the
laws of the State of Wisconsin and is exempt from registration as a
holding company under the Public Utility Holding Company Act of 1935, as
amended.
CONTENTS
--------
PAGE
PART I. ----
Financial Information 1
Management's Discussion and Analysis of
Interim Financial Statements 2-7
Consolidated Financial Statements of WICOR, Inc. (Unaudited):
-------------------------------------------------------------
Consolidated Statements of Operation for the
Three and Nine Months Ended September 30, 1998 and 1997 8
Consolidated Balance Sheets as of
September 30, 1998 and December 31, 1997 9-10
Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 1998 and 1997 11
Notes to Consolidated Financial Statements 12
PART II.
Other Information and Exhibits 13
Signatures 14
<PAGE>
<PAGE> 3
Part I - Financial Information
Financial Statements
--------------------
The consolidated statements included herein have been prepared without audit
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules
and regulations, although management believes that the disclosures are
adequate to make the information presented not misleading. These condensed
financial statements should be read in conjunction with the audited financial
statements and the notes thereto included in the WICOR, Inc. Annual Report on
Form 10-K for the year ended December 31, 1997.
In the opinion of management, the information furnished reflects all
adjustments, which in all circumstances were normal and recurring, necessary
for a fair presentation of the results of operations for the interim periods.
Because of seasonal factors, the results of operations for the interim
periods presented are not necessarily indicative of the results to be
expected for the full calendar year.
Forward-Looking Statements
- --------------------------
Certain matters discussed in this report are "forward-looking statements"
intended to qualify for the safe harbor from liability established by the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements generally can be identified as such because they include words
such as the Company "believes," "anticipates," "expects," or words of similar
import. Similarly, statements that describe the Company's future plans,
objectives or goals also are considered forward-looking. Such statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from current expectations. These factors include but are
not limited to the risks and uncertainties listed below. All of these factors
are difficult to predict and generally beyond management's control.
>> the impact of warmer- or colder-than-normal weather on the energy
business
>> the impact of cool or wet weather on the pump manufacturing markets
>> economic conditions, including the availability of individual
discretionary income and changes in interest rates and foreign currency
valuations
>> changes in natural gas prices and supply availability
>> increased competition in deregulated energy markets
>> the pace and extent of energy industry deregulation
>> regulatory, government and court decisions
>> increases in costs to clean up environmental contamination
>> the Company's ability to increase prices
>> market demand for the Company's products and services
>> unanticipated expenses or outcomes associated with year 2000 date
conversion
<PAGE>
<PAGE> 4
Management's Discussion and Analysis
of Interim Financial Statements of
WICOR, Inc.
Results of Operations
- ---------------------
The consolidated net loss for the third quarter of 1998 was $1.2 million
or $0.9 million lower than in the comparable period of the prior year.
The Company's energy business typically incurs a loss in the third
quarter due to the seasonal nature of the gas distribution utility
business. Continued strength in the manufacturing operations enabled the
Company to post its smallest third quarter loss since it was formed in
1980. Consolidated net earnings for the nine months ended September 30,
1998, decreased by $2.4 million, or 7%, to $29.8 million compared to the
same period of last year.
The following factors had a significant effect on the results of
operations during the three- and nine-month periods ended September 30,
1998.
Energy
- ------
The net loss for the Energy Group in the third quarter of 1998 was
slightly greater than the net loss for the 1997 third quarter. Net
earnings for the nine months ended September 30, 1998 decreased by $6.6
million, or 37%, compared to the same period of last year.
The decline in 1998 year-to-date net earnings resulted from decreased gas
margins which were partially offset by lower operating and maintenance
expenses. The lower gas margins were driven by warmer weather during the
heating season (18% warmer than last year on a year to date basis). This
decrease was partially offset by reduced operating and maintenance costs
due to lower labor and benefits expense, a gain recorded earlier in the
year relating to a weather insurance agreement, impact of the Gas Cost
Incentive Mechanism (GCIM) and a gain realized on the sale of non-utility
land.
Revenues, margins and volumes are summarized below. Margin, defined as
revenues less cost of gas sold, is a better performance indicator than
revenues because the mix of utility volumes between sales and
transportation service affects revenues but not margin. In addition,
changes in the cost of gas sold are flowed through to revenue for
Wisconsin Gas under a gas adjustment clause. The following tables set
forth results of operation data for the Energy Group and volume data for
Wisconsin Gas, for each of the periods shown.
<PAGE>
<PAGE> 5
[CAPTION]
<TABLE>
Three Nine
Months Ended Months Ended
September 30, September 30,
----------------- % ----------------- %
(Millions of Dollars) 1998 1997 Change 1998 1997 Change
- --------------------- -------- -------- ------ -------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Energy Revenues $ 59.0 $ 66.6 (11) $ 324.4 $ 404.5 (20)
Cost of Gas Sold 39.7 46.1 (14) 211.2 278.6 (24)
-------- -------- -------- --------
Sales Margin 19.3 20.5 (6) 113.2 125.9 (10)
Gas Transportation Margin 4.3 4.4 (2) 16.2 16.2 -
-------- -------- -------- --------
Gross Margin 23.6 24.9 (5) 129.4 142.1 (9)
-------- -------- -------- --------
Operation and Maintenance 21.8 22.4 (3) 73.7 75.0 (2)
Depreciation/Amortization 8.4 8.0 5 25.2 23.5 7
Taxes, Other Than Income Tax 2.2 2.3 (4) 7.0 7.0 -
-------- -------- -------- --------
32.4 32.7 (1) 105.9 105.5 -
-------- -------- -------- --------
Operating (Loss) Income (8.8) (7.8) (13) 23.5 36.6 (36)
-------- -------- -------- --------
Interest Expense (3.0) (2.9) (3) (9.1) (8.8) (3)
Other Income/(Expenses), net 1.1 0.3 267 3.0 0.7 329
-------- -------- -------- --------
Pretax (Loss) Earnings (10.7) (10.4) (3) 17.4 28.5 (39)
Income Tax (Benefit) Expense (4.0) (4.0) - 6.4 10.9 (41)
-------- -------- -------- --------
Net (Loss) Earnings $ (6.7) $ (6.6) (2) $ 11.0 $ 17.6 (37)
======== ======== ======== ========
(Millions of Therms)
- --------------------
Utility Sales Volumes
- ---------------------
Firm 44.8 53.0 (15) 441.9 541.8 (18)
Interruptible 6.1 10.7 (43) 28.1 58.6 (52)
Transportation Volume 92.4 88.1 5 329.3 309.2 6
-------- -------- -------- --------
Total Throughput 143.3 151.8 (6) 799.3 909.6 (12)
======== ======== ======== ========
Degree Days
- -----------
Actual 47 162 (71) 3,857 4,692 (18)
======== ======== ======== ========
20 year average 155 4,539
======== ========
</TABLE>
<PAGE>
<PAGE> 6
The decrease in firm sales volumes for the nine months ended September
30, 1998 was caused principally by warmer weather, lower average use per
customer and firm customers switching from sales to transportation
service. Transportation volumes increased mainly because more customers
purchased gas from sources other than Wisconsin Gas and transported the
volumes over the Wisconsin Gas distribution system. Historically, the
movement to transportation from gas sales had no impact on margin. A
slightly lower margin rate was put into effect on November 1, 1997, for
transportation-only customers. The future impact of this margin
adjustment on total Company earnings is expected to be immaterial. The
weather was 15% warmer than the 20-year average during the first nine
months of 1998 and 18% warmer than the same period in 1997.
Operations and maintenance expenses decreased $0.6 million, or 3%, and
$1.3 million, or 2%, for the three and nine months ended September 30,
1998, respectively, compared with the same periods of last year. The
decrease for the quarter and year-to-date periods was due to lower labor
and benefit expenses at Wisconsin Gas. This decrease was partially
offset by costs associated with the increased operating costs incurred by
FieldTech, Inc., a wholly owned subsidiary of WICOR.
Depreciation expense for the nine months ended September 30, 1998,
increased by $1.7 million, or 7%, compared with the same period of 1997.
The increase was due to additions to depreciable plant balances.
Other income for the 1998 third quarter increased due to a $0.8 million
pretax gain associated with the sale of non-utility land. For the nine
months ending September 30, 1998, other income was positively impacted by
the land sale and a gain associated with a weather insurance agreement.
Manufacturing
- -------------
Manufacturing net earnings for the three and nine months ended September
30, 1998, increased by 22% to $5.5 million and 29% to $18.8 million,
respectively, as compared with the same periods in 1997.
<PAGE>
<PAGE> 7
<TABLE>
<CAPTION>
Three Nine
Months Ended Months Ended
September 30, September 30,
----------------- % ----------------- %
(Millions of Dollars) 1998 1997 Change 1998 1997 Change
- --------------------- -------- -------- ------ -------- -------- ------
<S> <C> <C> <C> <C>
Net Sales $ 109.4 $ 102.3 7 $ 355.3 $ 323.3 10
Cost of goods sold 78.4 73.5 7 253.3 233.8 8
-------- -------- -------- --------
Gross profit 31.0 28.8 8 102.0 89.7 14
Operating expenses 21.3 20.3 5 67.9 62.3 9
-------- -------- -------- --------
Operating income 9.7 8.5 14 34.1 27.4 24
Interest expense (1.1) (1.1) - (3.6) (4.0) (10)
Other Income/(expense), net 0.2 - NA 0.1 - NA
-------- -------- -------- --------
Net income before income taxes 8.8 7.4 19 30.6 23.4 31
Income taxes 3.3 2.9 14 11.8 8.8 34
-------- -------- -------- --------
Net earnings $ 5.5 $ 4.5 22 $ 18.8 $ 14.6 29
======== ======== ======== ========
</TABLE>
Domestic sales in the third quarter increased to $79.8 million, or 17%,
over the comparable period of 1997. Overall shipments within the water
systems, pool/spa, filtration and the food and beverage markets in North
America were up from last year's comparable period. The increase was due
mainly to growth in customer base and new product introductions.
International sales for the third quarter decreased to $29.6 million, or
14%, compared to the third quarter of 1997. The decrease in
international sales, due primarily to the impact of foreign currency
translation related to the strengthening U.S. dollar and continued
volatility in the Asian economy, was partially offset by the introduction
of new products. On a year-to-date basis, international sales decreased
by 4% compared to the same period in 1997. For the nine months ended
September 30, 1998 and 1997, international sales accounted for 30% and
34%, respectively, of total net sales for the manufacturing group.
<PAGE>
<PAGE> 8
Gross profit margins for the three and nine months ended September 30,
1998, improved to 28.3% and 28.7%, respectively, as compared with 28.1%
and 27.7%, respectively, in the same periods of last year. Improved
manufacturing productivity continued to positively impact gross profit
during the periods. Operating expenses, as a percentage of sales, for
the nine months ended September 30, 1998, decreased slightly compared to
the same period in 1997. Operating expenses in total increased by $5.6
million, or 9%, due in part to the impact of higher support spending for
product line acquisitions, introductions of new products and customer
development.
Interest Expense, Non-Operating Income and Expense and Income Taxes
- -------------------------------------------------------------------
Interest expense for the Company on a consolidated basis increased
slightly for the three and nine months ended September 30, 1998, compared
to the similar periods of 1997. The increase reflects slightly higher
borrowing levels to fund working capital requirements.
Other income, net of expenses, increased by $2.8 million for the nine
months ended September 30, 1998, compared to the same period of 1997.
See the discussion within the Energy section for further information on
this matter.
Income tax expense was $1.4 million lower for the first nine months of
1998 compared to the same period last year, reflecting lower pre-tax
income.
Financial Condition
- -------------------
Cash flow from operations for the nine months ended September 30, 1998,
increased by $32.8 million, or 37%, from the comparable period in 1997.
The cash flow improvement was due primarily to lower gas prices. Due to
the seasonal nature of the energy business, accrued revenues, accounts
receivable and accounts payable amounts are higher in the heating season.
Cash flow from operations exceeded capital expenditures and dividend
requirements for the first nine months in both 1998 and 1997.
Capital expenditures decreased by $0.9 million, or 3%, to $33.9 million
for the nine months ended September 30, 1998, compared to the same period
in 1997. Cash flow from operations is expected to be sufficient to fund
remaining capital expenditures for 1998.
In November, 1998, $40 million, 7-1/2% notes will mature. The Company
will use commercial paper to retire the notes and will evaluate long-term
financing options for the notes.
<PAGE>
<PAGE> 9
Additional short-term borrowing will be needed during the fourth quarter
of 1998 to finance working capital primarily related to gas purchased for
injection into storage and accounts receivable. The Company has
sufficient borrowing capacity under commercial paper programs or existing
lines of credit to satisfy these working capital needs.
On July 28, 1998, the Board of Directors of the Company authorized an
increase in the Company's dividend per share on common stock to $0.22 per
quarter ($0.88 per share on an annualized basis). The first quarterly
payment at the new amount was made August 31, 1998, to shareholders of
record on August 10, 1998.
Regulatory Matters
- ------------------
The approved by the Public Service Commission of Wisconsin (PSCW) in
October 1997, became effective on November 1, 1997, for each of the three
years ending October 31, 1998, 1999 and 2000. Under the GCIM, Wisconsin
Gas's gas commodity and capacity costs are compared to monthly
benchmarks. If, at the end of each GCIM year, such costs deviate by more
than 1-1/2% from the benchmark cost of gas, the utility shares such
excess or reduced costs on a 50-50 basis with customers. The sharing
mechanism applies only to costs between 1-1/2% to 4% above or below the
benchmark. The GCIM provides an opportunity for Wisconsin Gas's earnings
to increase or decrease as a result of gas and capacity acquisition
activities. Reduced gas costs under the GCIM have been shared between
the Company and its customers.
Wisconsin Gas increased its rates within the framework of the
Productivity-based Alternative Ratemaking Mechanism (PARM) by $7.5
million, on an annualized basis effective August 1, 1998. With this
increase, Wisconsin Gas's rates recover $1.5 million per year less than
the maximum amount allowed by the PSCW's November 1994 rate order. The
Company has the ability to raise or lower margin rates within a specified
range on a quarterly basis. The rate increase is expected to offset
increased operating costs.
<PAGE>
<PAGE> 10
Accounting Standards
- --------------------
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards 131, "Disclosure About Segments of an
Enterprise and Related Information" ("SFAS 131"). This statement
establishes additional standards for segment reporting in the financial
statements and is effective for fiscal years beginning after December 15,
1997. The Company believes the segment information required to be
disclosed under SFAS 131 will be more comprehensive than previously
provided, including expanded disclosure of income statement and balance
sheet items for each of its reportable segments under SFAS 131. However,
the Company has not yet completed its analysis of which operating
segments will be subject to this reporting requirement.
Year 2000 Date Conversion
- -------------------------
Issues relating to Year 2000 conversion are the result of computer
software programs being written using two digits rather than four to
define the applicable year. Any of the Company's software programs,
computer hardware or equipment that have date sensitive software or
embedded chips may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices,
distribute natural gas, manufacture products or engage in other normal
business activities.
The Company has developed a formal plan to ensure that all of its
significant date-sensitive computer software and hardware systems
(Information Technology) and other equipment utilized in its various
activities (Operating Equipment) will be Year 2000 compliant and
operational on a timely basis. The plan addresses all of the Company's
locations throughout the world, and includes a review of computer
applications that connect elements of the Company's business directly to
its customers and suppliers. The plan also includes an assessment
process to determine if the Company's significant customers and suppliers
will be Year 2000 compliant.
The Company's plan to resolve issues relating to Year 2000 conversion
includes four major phases - assessment, remediation, testing, and
implementation. To assist the Company in reaching Year 2000 compliance,
the Company has retained third party consultants to assist with the
project. The Company has substantially completed the assessment phase of
its plan for all of its significant Information Technology and Operating
Equipment that it believes could be affected by the Year 2000 conversion.
Based upon its assessment, the Company concluded that it would be
necessary to reprogram and/or replace certain of its Information
Technology. The Company also determined that certain of its Operating
Equipment would also require modifications to ensure it remains
operational.
<PAGE>
<PAGE> 11
For its Information Technology applications, the Company believes it is
approximately 54% compliant on all of its significant systems, and
estimates that it will complete software reprogramming and/or replacement
in the second quarter of 1999. The Company believes that the Operating
Equipment is approximately 36% compliant, and the Company is targeting
completion during the second quarter of 1999.
With respect to operations that involve third parties, the Company has
made inquiries of its significant customers and suppliers and, at the
present time and based on such inquires, is not aware of Year 2000 issues
facing these third parties that would materially impact the Company's
operations. However, the Company has no means of ensuring that these
customers and suppliers (and, in turn, their customers and suppliers)
will be Year 2000 compliant in a timely manner. The inability of these
parties to successfully resolve their Year 2000 issues could have a
material adverse effect on the Company.
Despite the efforts that the Company has undertaken, there can be no
assurances that every Year 2000 related issue will be identified and
addressed before January 1, 2000. An unexpected failure as a result of a
Year 2000 compliance issue could result in an interruption in certain
normal business activities or operations. For that reason, the Company
is currently developing contingency plans to address alternatives in the
event certain Year 2000 compliance failures occur.
Through September 30, 1998, the Company had spent approximately $3.5
million for Year 2000 remediation. The amount of additional development
and remediation costs necessary for the Company to prepare for Year 2000
is estimated to be approximately $1.3 million and is expected to be
funded through operating cash flow.
The estimated costs of, and timetable for, becoming Year 2000 compliant
constitute "forward looking statements" as defined in the Private
Securities Litigation Reform Act of 1995 (see Part 1 of this Form 10-Q).
<PAGE>
<PAGE> 12
WICOR, INC.
Consolidated Statements of Operation (Unaudited)
(Amounts in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Operating Revenues:
Energy $ 63,351 $ 71,045 $ 340,615 $ 420,699
Manufacturing 109,395 102,297 355,337 323,313
---------- ---------- ---------- ----------
172,746 173,342 695,952 744,012
---------- ---------- ---------- ----------
Operating Costs and Expenses:
Cost of gas sold 39,728 46,182 211,226 278,596
Manufacturing cost of sales 78,443 73,528 253,261 233,615
Operations and maintenance 42,823 42,336 140,593 136,275
Depreciation and amortization 8,758 8,376 26,162 24,515
Taxes, other than income taxes 2,197 2,308 7,024 7,093
---------- ---------- ---------- ----------
171,949 172,730 638,266 680,094
---------- ---------- ---------- ----------
Operating Income 797 612 57,686 63,918
---------- ---------- ---------- ----------
Interest Expense (4,049) (3,925) (12,634) (12,300)
Other Income and (Expenses) 1,300 172 2,966 184
---------- ---------- ---------- ----------
(Loss)/Earnings Before Income Taxes (1,952) (3,141) 48,018 51,802
Income Tax (Benefit)/Provision (741) (1,070) 18,242 19,650
---------- ---------- ---------- ----------
Net (Loss)/Earnings $ (1,211) $ (2,071) $ 29,776 $ 32,152
========== ========== ========== ==========
Per Share of Common Stock:
Basic earnings $ (0.03) $ (0.06) $ 0.80 $ 0.87
Diluted earnings $ (0.03) $ (0.06) $ 0.79 $ 0.87
Cash Dividends paid $ 0.220 $ 0.215 $ 0.650 $ 0.635
Average shares outstanding 37,335 36,940 37,297 36,870
Average diluted shares outstanding 37,335 36,940 37,602 37,130
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<PAGE> 13
WICOR, INC.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30,
1998 December 31,
(Unaudited) 1997
Assets ----------- ------------
- ------ (Thousands of Dollars)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 6,347 $ 11,810
Accounts receivable, less allowance
for doubtful accounts of $14,286
and $15,364, respectively 112,012 164,243
Accrued utility revenues 8,119 44,842
Manufacturing inventories 82,169 83,431
Gas in storage, at weighted average cost 45,327 41,887
Deferred income taxes 21,491 21,531
Prepayments and other 15,179 16,924
----------- ------------
290,644 384,668
Property, Plant and Equipment (less accum- ----------- ------------
ulated depreciation of $525,117
and $497,239, respectively) 442,577 445,894
----------- ------------
Deferred Charges and Other:
Goodwill 64,610 65,953
Regulatory assets 61,668 53,910
Prepaid pension costs 48,298 42,753
Systems development costs 13,976 17,424
Other 20,867 20,730
----------- ------------
209,419 200,770
----------- ------------
$ 942,640 $ 1,031,332
=========== ============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<PAGE> 14
WICOR, INC.
Consolidated Balance Sheets
(continued)
<TABLE>
<CAPTION>
September 30,
1998 December 31,
(Unaudited) 1997
Liabilities and Capitalization ------------ ------------
- ------------------------------ (Thousands of Dollars)
<S> <C> <C>
Current Liabilities:
Short-term borrowings $ 58,205 $ 118,900
Accounts payable 66,275 75,034
Current portion of long-term debt 43,608 43,926
Refundable gas costs 15,930 24,776
Accrued payroll and benefits 20,604 17,573
Accrued taxes 7,649 9,684
Other 20,942 19,999
------------ ------------
233,213 309,892
------------ ------------
Deferred Credits and Other:
Postretirement benefit obligation 61,265 64,323
Regulatory liabilities 33,648 36,533
Deferred income taxes 44,587 43,975
Accrued environmental remediation costs 9,277 12,084
Unamortized investment tax credit 6,584 6,808
Other 19,582 18,987
------------ ------------
174,943 182,710
------------ ------------
Capitalization:
Long-term debt 139,402 149,110
Common stock 37,345 37,202
Other paid-in capital 216,113 214,101
Retained earnings 153,430 147,903
Accumulated other comprehensive income (7,850) (5,377)
Unearned compensation - ESOP
and restricted stock (3,956) (4,209)
------------ ------------
534,484 538,730
------------ ------------
$ 942,640 $ 1,031,332
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<PAGE> 15
WICOR, INC.
Consolidated Statement of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------
1998 1997
(Thousands of Dollars) ---------- ----------
<S> <C> <C>
Operations:
Net earnings $ 29,776 $ 32,152
Adjustments to reconcile net earnings to net cash flows:
Depreciation and amortization 41,231 40,171
Deferred income taxes 650 264
Change in:
Receivables 78,954 76,605
Manufacturing inventories 1,261 (3,492)
Gas in storage (3,440) (17,090)
Other current assets (571) 649
Accounts payable (8,759) (25,508)
Refundable gas costs (8,845) (12,350)
Accrued taxes 282 6,975
Other current liabilities 3,976 2,418
Other non-current assets
and liabilities, net (14,086) (13,125)
---------- ----------
120,429 87,669
---------- ----------
Investment Activities:
Capital expenditures (33,896) (34,810)
Acquisition of business assets - (2,065)
Other 326 275
---------- ----------
(33,570) (36,600)
---------- ----------
Financing Activities:
Change in short-term borrowings (60,695) (58,293)
Reduction in long-term debt (12,368) (9,594)
Issuance of long-term debt 2,828 27,000
Issuance of common stock 2,155 2,389
Dividends paid on common stock, less (24,242) (23,403)
---------- ----------
(92,322) (61,901)
---------- ----------
Change in Cash and Cash Equivalents (5,463) (10,832)
Cash and Cash Equivalents at Beginning of Period 11,810 18,784
---------- ----------
Cash and Cash Equivalents at End of Period $ 6,347 $ 7,952
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<PAGE> 16
Notes to Consolidated Financial Statements (Unaudited):
- -------------------------------------------------------
1) The Company and its subsidiaries maintain lines of credit worldwide.
At September 30, 1998, the Company had borrowings of $14.3 million and
availability of $233.2 million under unsecured lines of credit with
several banks. The Company has classified $17.6 million of commercial
paper as long-term debt as of September 30, 1998.
A total of $43.9 million of commercial paper, classified as short-term
debt, was outstanding as of September 30, 1998 at a weighted average
interest rate of 5.5%.
2) 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 the Nine Months
Ended September 30,
----------------------
1998 1997
---------- ----------
(Thousands of Dollars)
Income taxes paid $ 20,355 $ 14,556
Interest paid $ 11,175 $ 12,008
3) Total comprehensive income for the nine months ended September 30,
1998 and 1997 is as follows:
1998 1997
---------- ----------
(Thousands of Dollars)
Net earnings $ 29,776 $ 32,152
Other comprehensive income
Currency translation adjustments (2,473) (3,697)
---------- ----------
Total comprehensive income $ 27,303 $ 28,455
========== ==========
<PAGE>
<PAGE> 17
Part II - Other Information
- ---------------------------
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial data schedule (EDGAR version only).
(b) Reports on Form 8-K - There were no reports on Form 8-K filed by the
Company during the third quarter of 1998
<PAGE>
<PAGE> 18
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WICOR, INC.
Dated: October 30, 1998 By: /s/ Joseph P. Wenzler
-------------------------
Joseph P. Wenzler
Senior Vice President and
Chief Financial Officer
<PAGE>
<PAGE> 19
WICOR, INC.
EXHIBIT INDEX
-------------
EXHIBIT NUMBER DESCRIPTION
- -------------- -------------------------------------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the WICOR,
Inc. FORM 10-Q for the nine months ended September 30, 1998 and is qualified in
its entirety by reference to such financial statements and the related
footnotes.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 377,897
<OTHER-PROPERTY-AND-INVEST> 64,680
<TOTAL-CURRENT-ASSETS> 290,644
<TOTAL-DEFERRED-CHARGES> 209,419
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 942,640
<COMMON> 37,345
<CAPITAL-SURPLUS-PAID-IN> 216,113
<RETAINED-EARNINGS> 153,430
<TOTAL-COMMON-STOCKHOLDERS-EQ> 406,888
0
0
<LONG-TERM-DEBT-NET> 149,042
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 110,000
<COMMERCIAL-PAPER-OBLIGATIONS> 43,946
<LONG-TERM-DEBT-CURRENT-PORT> 43,608
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 299,156
<TOT-CAPITALIZATION-AND-LIAB> 942,640
<GROSS-OPERATING-REVENUE> 695,952
<INCOME-TAX-EXPENSE> 18,242
<OTHER-OPERATING-EXPENSES> 638,266
<TOTAL-OPERATING-EXPENSES> 656,508
<OPERATING-INCOME-LOSS> 39,444
<OTHER-INCOME-NET> 2,966
<INCOME-BEFORE-INTEREST-EXPEN> 42,410
<TOTAL-INTEREST-EXPENSE> 12,634
<NET-INCOME> 29,776
0
<EARNINGS-AVAILABLE-FOR-COMM> 29,776
<COMMON-STOCK-DIVIDENDS> 24,242
<TOTAL-INTEREST-ON-BONDS> 698
<CASH-FLOW-OPERATIONS> 120,429
<EPS-PRIMARY> 0.80
<EPS-DILUTED> 0.79
</TABLE>
