<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 June 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 July 17, 1998
- -------------------------- -------------------------------
Common Stock, $1 Par Value 37,331,232
<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 2-5
Consolidated Financial Statements of WICOR, Inc. (Unaudited):
Consolidated Statements of Operation for the
Three and Six Months Ended June 30, 1998 and 1997 6
Consolidated Balance Sheets as of
June 30, 1998 and December 31, 1997 7-8
Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 1998 and 1997 9
Notes to Consolidated Financial Statements 10
PART II.
Other Information and Exhibits 11-12
Signatures 13
<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
<PAGE>
<PAGE> 4
Management's Discussion and Analysis
of Interim Financial Statements of
WICOR, Inc.
Results of Operations
- ---------------------
Consolidated net earnings for the three months ended June 30, 1998
decreased by $0.3 million, or 5%, to $6.0 million. Consolidated net
earnings for the six months ended June 30, 1998 decreased by $3.2 million,
or 9%, to $31.0 million. The decrease in the three and six month periods
is attributable to lower Energy Group earnings. Increased earnings within
the Manufacturing Group partially offset these decreases.
The following factors had a significant effect on the results of operations
during the three- and six-month periods ended June 30, 1998.
Energy Group
- ------------
The Energy Group incurred a net loss of $1.8 million in the second quarter
of 1998 compared with earnings of $0.2 million for the second quarter of
1997. Net earnings for the six months ended June 30, 1998, decreased by
$6.4 million, or 27%, to $17.7 million compared to $24.1 million for the
same period of last year.
The decline in net earnings for the three and six months ended June 30,
1998 resulted from decreased gas margins which were partially offset by
lower operating and maintenance expenses. The lower gas margins were
driven by a combination of warm winter weather and a voluntary $1.5 million
annual rate reduction effective November 1, 1997. The effect of these
items was partially offset by a gain related to a weather insurance
agreement which was recorded in the first quarter of 1998.
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 substantially flowed through to revenue
for Wisconsin Gas under a gas adjustment clause. The following tables set
forth margin data for the Energy Group and volume data for the utility for
each of the three- and six-month periods ended June 30 set forth below.
<PAGE>
<PAGE> 5
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
----------------- % ----------------- %
1998 1997 Change 1998 1997 Change
(Millions of Dollars) -------- -------- ------ -------- -------- ------
- --------------------
<S> <C> <C> <C> <C> <C> <C>
Energy Revenues $ 85.5 $ 100.9 (15) $ 265.4 $ 337.9 (21)
Cost of Gas Sold 56.1 68.0 (17) 171.5 232.4 (26)
-------- -------- -------- --------
Sales Margin 29.4 32.9 (11) 93.9 105.5 (11)
Gas Transportation Margin 4.7 5.0 (6) 11.9 11.7 2
-------- -------- -------- --------
Gross Margin 34.1 37.9 (10) 105.8 117.2 (10)
Operation and Maintenance 24.0 24.8 (3) 51.8 52.5 (1)
Depreciation/Amortization 8.3 7.9 5 16.7 15.5 8
Interest and Other 2.5 2.6 (4) 4.4 5.5 (20)
Taxes, Other Than Income Tax 2.2 2.2 - 4.8 4.8 -
-------- -------- -------- --------
(Loss) Income Before
Income Taxes (2.9) 0.4 N.A. 28.1 38.9 (28)
Income Tax (Benefit) Expense (1.1) 0.2 N.A. 10.4 14.8 (30)
-------- -------- -------- --------
Net (Loss) Earnings $ (1.8) $ 0.2 N.A. $ 17.7 $ 24.1 (27)
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
----------------- % ----------------- %
1998 1997 Change 1998 1997 Change
-------- -------- ------ -------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
(Millions of Therms)
- --------------------
Utility Sales Volumes
Firm 95.4 127.4 (25) 397.1 488.8 (19)
Interruptible 8.0 13.8 (42) 22.0 47.9 (54)
Transportation Volume 99.0 98.2 1 237.0 221.1 7
-------- -------- -------- --------
Total Throughput 202.4 239.4 (15) 656.1 757.8 (13)
======== ======== ======== ========
Degree Days
- -----------
Actual 895 1,215 (26) 3,810 4,530 (16)
======== ======== ======== ========
20 year average 950 4,384
======== ========
</TABLE>
<PAGE>
<PAGE> 6
The decrease in firm sales volumes for the three and six months
ended June 30, 1998 was caused principally by warmer weather,
lower average use per residential customer and firm sales
customers switching to transportation. The weather for the three
and six months ended June 30, 1998 was 6% and 13% warmer,
respectively, than the 20-year average. For both periods,
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, customers transferring to transportation
from gas sales had no impact on margin. However, effective
November 1, 1997, a slightly lower margin rate was put into
effect for transportation-only customers. The future impact of
this margin adjustment on total Company earnings is expected to
be immaterial.
The gas cost incentive mechanism ("GCIM") 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 new GCIM provides
an opportunity for Wisconsin Gas's earnings to increase or
decrease as a result of gas and capacity acquisition activities.
Management believes that Wisconsin Gas and its customers will
share in reduced gas costs as a result of the GCIM.
Non-regulated Energy Group revenues for the first six months of
1998 remained relatively level at $29.6 million compared to the
same period of 1997. The Company's strategy in the gas marketing
area is to have gas supply arrangements closely tied to customer
requirements so that the Company is not exposed to significant
commodity price risk.
Operating and maintenance expenses decreased slightly during the
three and six months ended June 30, 1998, compared to comparable
periods in 1997. Lower expenses at the utility during both
periods were partially offset by higher non-utility expenses
associated with increased operating activities of FieldTech, Inc.
Depreciation expense for the three and six months ended June 30,
1998, increased by $0.4 million and $1.2 million, respectively,
as compared with the comparable periods of 1997. The increase in
both periods in 1998 was due to increases in depreciable plant
balances.
<PAGE>
<PAGE> 7
Manufacturing
- -------------
Manufacturing net earnings for the three and six months ended
June 30, 1998 increased to $7.8 million and $13.3 million,
respectively, as compared with $6.1 million and $10.1 million for
the same periods in 1997, respectively.
<TABLE>
<CAPTION>
Three Months Six months
Ended June 30, Ended June 30,
----------------- % ----------------- %
(Millions of Dollars) 1998 1997 Change 1998 1997 Change
-------- -------- ------ -------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Net Sales $ 129.6 $ 115.7 12 $ 245.9 $ 221.0 11
Cost of goods sold 91.9 83.0 11 174.8 160.1 9
-------- -------- -------- --------
Gross profit 37.7 32.7 15 71.1 60.9 17
Operating expenses 23.3 21.3 9 46.6 42.1 11
-------- -------- -------- --------
Operating income 14.4 11.4 26 24.5 18.8 30
Interest expense and other 1.5 1.5 - 2.6 2.8 (7)
-------- -------- -------- --------
Net income before income taxes 12.9 9.9 30 21.9 16.0 37
Income taxes 5.1 3.8 34 8.6 5.9 46
-------- -------- -------- --------
Net earnings $ 7.8 $ 6.1 28 $ 13.3 $ 10.1 32
======== ======== ======== ========
</TABLE>
Domestic sales in the second quarter increased to $90.0 million, which is
20% over the comparable period of 1997. Overall shipments to the water
systems and pool/spa markets in North America were up from last year's
comparable period. The increase is attributable to customer base growth,
new product market penetration and generally favorable economic and weather
conditions in the United States. Domestic sales for the six months ended
June 30, 1998 increased $24.2 million to $169.8 million.
International sales for the second quarter decreased by 3% to $39.6 million
compared to $40.6 million in the second quarter of 1997. A strengthening
U.S. dollar and a downturn in the Asian economy continued to adversely
affect sales. On a year to date basis, international sales increased by 1%
over the same period in 1997. For the six months ended June 30, 1998 and
1997, international sales accounted for 31% and 34%, respectively, of total
net sales for the Manufacturing Group.
Gross profit margins for the three and six months ended June 30, 1998
improved to 29.1% and 28.9%, respectively, as compared with 28.2% and 27.6%
in the same periods of 1997, respectively. Plant consolidations positively
impacted gross profit during the periods. Operating expenses, as a
percentage of sales, for the six months ended June 30, 1998 decreased
slightly compared to the same period in 1997 due to higher sales levels
<PAGE>
<PAGE> 8
Operating expenses in total increased by 11% due in part to the impact of
higher support spending for product line acquisitions, market introductions
of new products and customer development.
Non-Operating Income and Income Taxes
- -------------------------------------
Interest expense remained relatively flat for the three and six months
ended June 30, 1998 compared to the similar periods of 1997.
Income tax expense was $1.7 million lower for the first six months of 1998,
compared to the same period last year, reflecting decreased pre-tax income.
Financial Condition
- -------------------
Cash flow from operations for the six months ended June 30, 1998 increased
by $36.0 million, or 40%, to $126 million from the comparable period in
1997. Due to the seasonal nature of the energy business, accrued revenues,
accounts receivable and accounts payable amounts are higher in the heating
season as compared with the summer months.
Capital expenditures were level for the six months ended June 30, 1998
compared to the same period in 1997. The Company believes that its cash
flows from operations will be sufficient to satisfy its future capital
expenditures.
Additional short-term borrowing will be needed during the third and fourth
quarters of 1998 to finance working capital primarily related to gas
purchased for injection into storage and accounts receivable. The Company
has existing lines of credit to satisfy these working capital needs.
During the fourth quarter of 1998, Wisconsin Gas plans to refinance $40
million of existing debt due in November, 1998.
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 rate will be made August 31, 1998, to shareholders of
record on August 10, 1998.
<PAGE>
<PAGE> 9
Regulatory Matters
- ------------------
On May 7, 1998, the PSCW approved a Company proposal to change WICOR's
nonutility investment limitation to no more than 60% of its total
capitalization. In addition, the PSCW found that the utility did not have
to be WICOR's predominant investment as long as the utility is adequately
insulated from nonutility activities and continues to offer high quality
service at reasonable rates. To monitor these conditions, the PSCW
determined that Wisconsin Gas must maintain at least a single-A bond rating
and maintain the standards imposed in the 1993 order that established the
Productivity-based Alternative Ratemaking Mechanism ("PARM"). Under these
new restrictions, the amount available to WICOR for future nonutility
investment at December 31, 1997 would have been $370 million.
On July 10, 1998, the Company filed with the PSCW to increase rates within
the framework of PARM. The new rates, which are effective August 1, 1998,
are expected to increase revenues $7.5 million on an annualized basis and
are expected to offset increased operating expenses.
New Accounting Standards
- ------------------------
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 133 (SFAS No. 133), "Accounting for
Derivative Instruments and Hedging Activities", effective in the first
quarter of 2000. SFAS No. 133 establishes accounting and reporting
standards for derivative instruments, including certain derivative
instruments embedded in other contracts and for hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the balance sheet and measure those instruments at fair
value. The Company is currently evaluating the impact of the provisions of
SFAS No. 133 on its financial statements. However, SFAS No. 133 could
increase volatility in earnings and other comprehensive income.
The American Institute of Certified Public Accountants Statement of
Position No. 98-1, "Accounting for the Costs of Computer Software Developed
or Obtained for Internal Use," provides guidance on accounting for the
costs of computer software developed or obtained for internal use. The
Company is currently evaluating the impact the statement will have on its
financial statements, if any.
Other
- -----
On June 25, 1998, four energy companies unveiled plans to build a new 150-
to 200-mile pipeline from the Chicago area into southeastern Wisconsin.
Although there is no assurance that the pipeline will ultimately be
constructed, the Company believes that a new pipeline from Chicago to
southeastern Wisconsin would be an important new source of natural gas
capacity that could lower prices for Wisconsin consumers. The project is
subject to Federal as well as various state approvals.
<PAGE>
<PAGE> 10
WICOR, INC.
Consolidated Statements of Operation (Unaudited)
(Amounts in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Operating Revenues:
Energy $ 90,261 $ 105,923 $ 277,264 $ 349,654
Manufacturing 129,618 115,682 245,942 221,016
---------- ---------- ---------- ----------
219,879 221,605 523,206 570,670
---------- ---------- ---------- ----------
Operating Costs and Expenses:
Cost of gas sold 56,149 67,993 171,498 232,414
Manufacturing cost of sales 91,913 83,043 174,818 160,087
Operations and maintenance 47,033 45,716 97,770 93,939
Depreciation and amortization 8,667 8,200 17,404 16,139
Taxes, other than income taxes 2,213 2,226 4,827 4,785
---------- ---------- ---------- ----------
205,975 207,178 466,317 507,364
---------- ---------- ---------- ----------
Operating Income 13,904 14,427 56,889 63,306
---------- ---------- ---------- ----------
Interest Expense (3,931) (3,937) (8,585) (8,375)
Other Income and (Expenses) (17) (160) 1,666 12
---------- ---------- ---------- ----------
Income Before Income Taxes 9,956 10,330 49,970 54,943
Income Tax Provision 3,932 4,015 18,983 20,720
---------- ---------- ---------- ----------
Net Earnings $ 6,024 $ 6,315 $ 30,987 $ 34,223
========== ========== ========== ==========
Per Share of Common Stock:
Basic earnings $ 0.16 $ 0.17 $ 0.83 $ 0.93
Diluted earnings $ 0.16 $ 0.17 $ 0.82 $ 0.92
Cash Dividends paid $ 0.215 $ 0.210 $ 0.430 $ 0.420
Average shares outstanding 37,312 36,844 37,277 36,836
Average diluted shares outstanding 37,612 37,078 37,618 37,070
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<PAGE> 11
WICOR, INC.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30,
1998 December 31,
(Unaudited) 1997
Assets ----------- ------------
- ------ (Thousands of Dollars)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 10,565 $ 11,810
Accounts receivable, less allowance
for doubtful accounts of $17,468
and $15,364, respectively 147,495 164,243
Accrued utility revenues 9,933 44,842
Manufacturing inventories 79,956 83,431
Gas in storage, at weighted average cost 23,812 41,887
Deferred income taxes 21,510 21,531
Prepayments and other 16,788 16,924
----------- ------------
310,059 384,668
Property, Plant and Equipment (less accum- ----------- ------------
ulated depreciation of $515,888
and $497,239, respectively) 441,105 445,894
----------- ------------
Deferred Charges and Other:
Regulatory assets 61,645 53,910
Goodwill 65,045 65,953
Prepaid pension costs 46,563 42,753
Systems development costs 15,051 17,424
Other 19,889 20,730
----------- ------------
208,193 200,770
----------- ------------
$ 959,357 $ 1,031,332
=========== ============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<PAGE> 12
WICOR, INC.
Consolidated Balance Sheets
(continued)
<TABLE>
<CAPTION>
June 30,
1998 December 31,
(Unaudited) 1997
Liabilities and Capitalization ------------ ------------
- ------------------------------ (Thousands of Dollars)
<S> <C> <C>
Current Liabilities:
Short-term borrowings $ 25,937 $ 118,900
Accounts payable 72,724 75,034
Current portion of long-term debt 43,667 43,926
Refundable gas costs 37,906 24,776
Accrued payroll and benefits 19,606 17,573
Accrued taxes 11,393 9,684
Other 17,937 19,999
------------ ------------
229,170 309,892
------------ ------------
Deferred Credits and Other:
Postretirement benefit obligation 62,699 64,323
Regulatory liabilities 33,911 36,533
Deferred income taxes 44,357 43,975
Accrued environmental remediation costs 9,695 12,084
Unamortized investment tax credit 6,473 6,808
Other 19,049 18,987
------------ ------------
176,184 182,710
------------ ------------
Capitalization:
Long-term debt 149,042 149,110
Common stock 37,330 37,202
Other paid-in capital 215,994 214,101
Retained earnings 162,857 147,903
Accumulated other comprehensive income (6,983) (5,377)
Unearned compensation - ESOP
and restricted stock (4,237) (4,209)
------------ ------------
554,003 538,730
------------ ------------
$ 959,357 $ 1,031,332
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<PAGE> 13
WICOR, INC.
Consolidated Statement of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------
(Thousands of Dollars) 1998 1997
---------- ----------
<S> <C> <C>
Operations:
Net earnings $ 30,987 $ 34,223
Adjustments to reconcile net
earnings to net cash flows:
Depreciation and amortization 27,813 27,134
Deferred income taxes 403 169
Change in:
Receivables 41,657 41,434
Manufacturing inventories 3,474 2,580
Gas in storage 18,074 10,645
Other current assets (656) (1,591)
Accounts payable (2,310) (27,636)
Refundable gas costs 13,131 5,594
Accrued taxes 2,502 8,109
Other current liabilities (25) (2,918)
Other non-current assets
and liabilities, net (9,068) (7,730)
---------- ----------
125,982 90,013
Investment Activities: ---------- ----------
Capital expenditures (20,466) (20,292)
Acquisition of business assets - (477)
Other 163 183
---------- ----------
(20,303) (20,586)
Financing Activities: ---------- ----------
Change in short-term borrowings (92,963) (60,499)
Reduction in long-term debt (2,782) (3,395)
Issuance of long-term debt 2,828 -
Issuance of common stock 2,022 1,965
Dividends paid on common stock (16,029) (15,468)
---------- ----------
(106,924) (77,397)
---------- ----------
Change in Cash and Equivalents (1,245) (7,970)
Cash and equivalents at Beginning of Period 11,810 18,784
---------- ----------
Cash and Equivalents at End of Period $ 10,565 $ 10,814
=========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<PAGE> 14
Notes to Consolidated Financial Statements (Unaudited):
1) The Company and its subsidiaries maintain lines of credit worldwide.
At June 30, 1998 the Company had borrowings of $25.9 million and
availability of $181.5 million under unsecured lines of credit with several
banks.
A total of $9.1 million of commercial paper, classified as short-term debt,
was outstanding as of June 30, 1998 at a weighted average interest rate of
5.7%.
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 Six Months
Ended June 30,
----------------------
1998 1997
---------- ----------
(Thousands of Dollars)
Income taxes paid $ 18,345 $ 13,582
Interest paid $ 8,552 $ 8,754
3) Total comprehensive income for the six months ended June 30, 1998 and
1997 is as follows:
1998 1997
---------- ----------
(Thousands of Dollars)
Net earnings $ 30,987 $ 34,223
Other comprehensive income
Currency translation adjustments (1,609) (2,584)
---------- ----------
Total comprehensive income $ 29,378 $ 31,639
========== ==========
4) On April 23, 1998, the Board of Directors approved a two-for-one stock
split of the Company's common stock to be effected by the distribution of
one additional share for each share outstanding. Such distribution was
made on May 29, 1998 to shareholders of record as of the close of business
on May 14, 1998. The par value of the common stock remained unchanged at
$1.00. In connection with the stock split, WICOR increased its authorized
shares of common stock from 60 million to 120 million. All references to
the number of common shares and per share amounts in the consolidated
financial statements have been restated to reflect the effect of the stock
split.
<PAGE>
<PAGE> 15
Part II - Other Information
- ---------------------------
Item 4. Submission of Matters to a Vote of Security Holders
- -----------------------------------------------------------
At the Company's annual meeting of shareholders held on April 23, 1998,
Wendell F. Bueche, Daniel F. McKeithan, Jr., George E. Wardeberg and Essie
M. Whitelaw were elected as directors of the Company for terms expiring in
2001. The following table sets forth certain information with respect to
the election of directors at the annual meeting:
Shares Withholding
Name of Nominee Shares Voted For Authority
- ------------------------ ---------------- ------------------
Wendell F. Bueche 31,840,771 577,704
Daniel F. McKeithan, Jr. 31,714,726 544,520
George E. Wardeberg 31,716,116 543,130
Essie M. Whitelaw 31,698,296 560,950
The following table sets forth the other directors of the Company whose
terms of office continued after the 1998 annual meeting:
Year in Which
Name of Director Term Expires
- ------------------------ --------------
Jere D. McCaffey 1999
Thomas F. Schrader 1999
Stuart W. Tisdale 1999
Willie D. Davis 2000
Guy A. Osborn 2000
William B. Winter 2000
At the Company's annual meeting of shareholders held on April 23, 1998, the
1994 Long-Term Performance Plan (the "Plan"), as amended, was approved.
The following table sets forth certain information with respect to the
approval of the Plan:
Shares Voted For Shares Voted Against Shares Abstaining
- ---------------- -------------------- -----------------
28,304,168 3,339,040 616,038
Item 5. Other Information
- -------------------------
James J. Monnat was named treasurer of WICOR effective May 1, 1998.
Thomas M. Rettler was named vice president of corporate development and
planning effective May 1, 1998.
<PAGE>
<PAGE> 16
The deadline for submission of shareholder proposals pursuant to Rule 14a-8
under the Securities Exchange Act of 1934, as amended, for inclusion in the
Company's proxy statement for its 1999 Annual Meeting of Shareholders is
November 13, 1998. Additionally, if the Company receives notice of a
shareholder proposal after January 26, 1999, the persons named in proxies
solicited by the Board of Directors of the Company for its 1999 Annual
Meeting of Shareholders may exercise discretionary voting power with
respect to such proposal.
<PAGE>
<PAGE> 17
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
a) Exhibits
3.1 WICOR, Inc. Restated Articles of Incorporation, as amended.
10.1 WICOR, Inc. 1994 Long-Term Performance Plan, as amended.
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 second quarter of 1998.
<PAGE>
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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: July 31, 1998 By: /s/ Joseph P. Wenzler
----------------------------
Joseph P. Wenzler
Senior Vice President and
Chief Financial Officer
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WICOR, Inc.
FORM 10-Q Exhibit
Exhibit No. Description
- ----------- ----------------------------------------------------------
3.1 WICOR, Inc. Restated Articles of Incorporated, as amended.
10.1 WICOR, Inc. 1994 Long-Term Performance Plan, as amended.
27 Financial data schedule (EDGAR version only)
<PAGE> 1
EXHIBIT 3.1
COMPOSITE
RESTATED ARTICLES OF INCORPORATION
OF
WICOR, Inc.
Effective January 28, 1980
Amended February 28, 1980, August 31, 1982, May 7, 1987, January 31,
1989, and April 27, 1989, Restated August 9, 1991, amended May 15, 1992
and April 23, 1998.
The following Restated Articles of Incorporation of WICOR, Inc., a
Wisconsin corporation, were duly adopted in accordance with the
Wisconsin Business Corporation Law and supersede and take the place of
the corporation's existing Articles of Incorporation and all amendments
thereto:
ARTICLE I
Name
The name of the corporation is WICOR, Inc.
ARTICLE II
Purposes
The purposes for which the Company is organized are to engage in any
lawful activity within the purposes for which corporations may be
organized under the Wisconsin Business Corporation Law, Chapter 180,
Wisconsin Statutes.
ARTICLE III
Authorized Shares
A. AUTHORIZED NUMBER AND CLASSES.
The authorized shares of the Company shall consist of 1,500,000 shares
of Cumulative Preferred Stock with a par value of $1.00 per share, and
120,000,000 shares of Common Stock with par value of $1.00 per share.
B. CUMULATIVE PREFERRED STOCK.
(1) SERIES AND VARIATIONS BETWEEN SERIES. The Cumulative Preferred
Stock may be divided into and issued in series. The Board of Directors
is hereby expressly vested with authority to divide such shares into
series and cause such shares to be issued from time to time in series
and, by resolution adopted prior to the issue of shares of a particular
series, to fix and determine, subject to the provisions of this Division
B, the distinctive serial designation of the shares of such series, the
number of authorized shares of such series (which number by like action
without further shareholder approval from time to time thereafter may be
increased except where otherwise provided by the Board of Directors in
creating such series, or may be decreased but not below the number of
shares thereof then outstanding), and the following relative rights and
preferences with respect to such series, as to which matters the shares
of a particular series may vary from those of any or all other series:
(a) the annual rate of dividends payable on shares of such series, and
the date from which dividends on all shares of such series issued prior
to the record date for the first dividend shall be cumulative;
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<PAGE> 2
(b) the price or prices at and the terms and conditions on which
shares may be redeemed;
(c) the amount or amounts payable upon the shares in the event of
voluntary or involuntary liquidation;
(d) sinking fund provisions, if any, for the redemption or purchase of
such shares;
(e) the terms and conditions on which such shares may be converted if
the shares of such series are issued with the privilege of conversion;
and
(f) the voting rights, if any, of such shares.
Except as the shares of a particular series may vary from those of any
or all other series in the foregoing respects, all of the shares of the
Cumulative Preferred Stock, regardless of series, shall in all respects
be equal and shall have the relative rights and preferences herein
fixed.
(2) DIVIDENDS.
(a) The holders of shares of Cumulative Preferred Stock of each
series, in preference to the holders of any junior stock, shall be
entitled to receive, as and when declared payable by the Board of
Directors from funds legally available for the payment thereof,
dividends in lawful money of the United States of America at the rate
per annum fixed and determined as herein authorized for the shares of
such series, but no more, payable quarterly on dates to be established
for all series when established by the Board of Directors for the first
series (the quarterly dividend payment dates), in each year with respect
to the quarterly period ending on the day prior to each such respective
dividend payment date. Such dividends shall be cumulative, in the case
of shares of each particular series:
(i) if issued prior to the record date for the first dividend on
shares of such series, then from the date fixed for this purpose by the
Board of Directors as provided in subparagraph (1) (a) of this Division
B;
(ii) if issued during the period commencing immediately after the
record date for a dividend on shares on such series and terminating at
the close of the payment date for such dividend, then from such last
mentioned dividend payment date; and
(iii) otherwise from the quarterly dividend payment date next
preceding the date or original issue of such shares.
Dividends on the Cumulative Preferred Stock shall be deemed to
accumulate from day to day. No dividends shall be paid upon, or declared
or set apart for, any share of Cumulative Preferred Stock for any
quarterly dividend period unless at the same time a like proportionate
dividend for the same quarterly dividend period shall be paid upon, or
declared or set apart for, all shares of Cumulative Preferred Stock of
all series then issued and outstanding. No dividends shall be paid upon
junior stock until all such cumulative dividends on the Cumulative
Preferred Stock for all past quarterly dividends shall have been paid or
funds for the payment thereof (without interest) set apart therefore.
Junior stock as used herein means any stock, including the Common Stock,
ranking junior to the Cumulative Preferred Stock as to dividends and
payments on liquidation.
(b) Each share of Cumulative Preferred Stock shall rank on a parity
with each other share of Cumulative Preferred Stock, irrespective of
series, with respect to dividends at the respective rates fixed for such
series, and no dividends shall be declared or paid or set apart for
payment on the Cumulative Preferred Stock of any series, unless at the
same time a dividend, bearing the same proportion to the applicable
dividend accrual, shall also be declared or paid or set apart for
payment as the case may be, on the Cumulative Preferred Stock of each
other series then outstanding.
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(c) So long as any shares of Cumulative Preferred Stock remain
outstanding, no dividend shall be paid or declared, or other
distribution made, on shares of junior stock, nor shall any shares of
junior stock be purchased, redeemed, retired or otherwise acquired for a
consideration unless dividends on outstanding shares of Cumulative
Preferred Stock for all past quarterly dividend periods shall have been
paid, or declared and set apart for payment; provided, however, that the
restrictions of this subparagraph shall not apply to the declaration and
payment of dividends on shares of junior stock if payable solely in
shares of junior stock, nor to the acquisition of any shares of junior
stock through application of proceeds of any shares of junior stock sold
at or about the time of such acquisition, nor shall such restrictions
prevent the transfer of any amount from surplus to stated capital.
(d) So long as any shares of the Cumulative Preferred Stock of any
series remain outstanding. the Company shall not declare any dividends
or other distribution, other than dividends or distributions payable in
junior stock, to the holders of shares of its junior stock if after
giving effect to such declaration or distribution the capital of the
Company represented by its junior stock as would then be stated on its
books of account, together with the surplus of the Company at the end of
any period of twelve (12) consecutive calendar months within a period of
fifteen (15) consecutive calendar months immediately preceding the month
in which such dividends or distributions are declared, shall in the
aggregate be less than the involuntary liquidating value of all shares
of its then outstanding Cumulative Preferred Stock. For the purpose of
this subparagraph, such surplus of the Company shall be adjusted for
any other dividends or distributions declared by, and changes in capital
or paid-in surplus of, the Company to and including the date of such
declaration.
(3) LIQUIDATION PREFERENCES.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Company, the holders of
shares of Cumulative Preferred Stock of each series shall be entitled to
be paid out of the assets of the Company before any distribution or
payment shall be made to the holders of any shares of junior stock, such
amount or amounts as shall have been fixed and determined by the Board
of Directors pursuant to paragraph (1) of this Division B when the
shares of such Cumulative Preferred Stock were issued, plus an amount
equivalent to all dividends accrued and unpaid thereon and no more.
(b) If upon any such liquidation, dissolution or winding up, two or
more series of Cumulative Preferred Stock are outstanding, any
distribution to holders of Cumulative Preferred Stock in an aggregate
amount less than the total payable with respect to all outstanding
Cumulative Preferred Stock shall be made ratably among all series of
Cumulative Preferred Stock in proportion to the full amount payable upon
such liquidation, dissolution or winding up in respect of each such
series.
(c) Neither a consolidation nor merger of the Company with or into any
other corporation, nor a merger of any other corporation into the
Company, nor the purchase or redemption of all or any part of the
outstanding shares of any class or classes of stock of the Company, nor
the sale or transfer of the property and business of the Company as or
substantially as an entirety shall be construed to be a dissolution or
liquidation of the Company within the meaning of the foregoing
provisions.
(4) REDEMPTION.
(a) If so provided by the Board of Directors pursuant to subparagraph
(1) (b) of this Division B, the Company, at the option of the Board
of Directors, or in accordance with the requirements of any sinking
fund for the Cumulative Preferred Stock or any series thereof, may
redeem the whole or any part of the Cumulative Preferred Stock at
any time outstanding, or the whole or any part of any series
thereof, at such time or times and from time to time and at such
redemption price or prices as may be fixed by the Board of
Directors pursuant t
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<PAGE> 4
subparagraph (1) (b) of this Division B, together in each case
with an amount equal to all unpaid dividends accrued thereon to the
date fixed for such redemption, and otherwise upon the terms and
conditions fixed by the Board of Directors for any such redemption.
(b) Subject to applicable law and this Article III, the Company may
from time to time purchase or otherwise acquire outstanding shares of
Cumulative Preferred Stock at a price per share not exceeding the amount
(inclusive of any accrued dividends) then payable in the event of
redemption thereof otherwise than through operation of a sinking fund,
if any.
(c) No shares of Cumulative Preferred Stock shall be purchased,
redeemed or otherwise acquired for a valuable consideration (i) in any
case if all dividends on the Cumulative Preferred Stock for all past
quarter yearly dividend periods shall not have been paid or declared and
a sum sufficient for the payment thereof set apart, or (ii) at any time
when the Company shall be in default or deficient under any requirement
of a sinking fund established with respect to outstanding shares of any
series of Cumulative Preferred Stock for any period then elapsed, except
for the purpose of wholly or partially eliminating such default or
deficiency.
(d) All shares of Cumulative Preferred Stock which at any time shall
have been redeemed or otherwise retired by the Company shall assume the
status of authorized but unissued Cumulative Preferred Stock
undesignated as to series and may thereafter be reclassified into one or
more other series and again issued in the same manner as other
authorized but unissued Cumulative Preferred Stock unless otherwise
provided by the Board of Directors at the time of establishment of the
series or at the time of redemption or retirement.
(5) VOTING RIGHTS.
(a) The holders of the Cumulative Preferred Stock shall have only such
voting rights as are fixed for shares of such series by the Board of
Directors pursuant to subparagraph (1) (f) of this Division B or as are
provided by Wisconsin law.
(b) Except where some mandatory provision of law shall be controlling
except with respect to the special rights of any one or more but less
than all of the then outstanding series of the Cumulative Preferred
Stock as provided in the resolutions creating such series, whenever
shares of two or more series of the Cumulative Preferred Stock are
outstanding, no particular series of the Cumulative Preferred Stock
shall be entitled to vote as a separate series on any matter and all
shares of the Cumulative Preferred Stock of all series shall be deemed
to constitute but one class for any purpose for which a vote of the
stockholders of the Company by classes may now or hereafter be required.
(c) Except as otherwise provided by these Articles or mandatorily
provided by statute at the time, holders of shares of Cumulative
Preferred Stock shall not be entitled to receive notice of any meeting
of shareholders at which they are not entitled to vote or consent.
C. COMMON STOCK.
(1) DIVIDENDS. Subject to the provisions of this Article III, the
Board of Directors may, in its discretion, out of funds legally
available for the payment of dividends and at such times and in such
manner as determined by the Board of Directors, declare and pay
dividends on the Common Stock.
(2) LIQUIDATION RIGHTS. In the event of any liquidation, dissolution
or winding up of the Company, after there shall have been paid to or
set aside for the holders of outstanding shares having superior
liquidation preferences to Common Stock the full preferential amounts
to which they are respectively entitled, the holders of outstanding
shares of Common Stock shall be entitled to receive prorata, according
to the number of shares held by each, the remaining assets of the
Company available for distribution
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<PAGE> 5
(3) VOTING RIGHTS. Except as otherwise provided by the laws of the
State of Wisconsin and except as may be determined by the Board of
Directors with respect to Cumulative Preferred Stock pursuant to
paragraph (1) of Division B of Article III, only the holders of Common
Stock shall be entitled to vote for the election of directors of the
Company and for all other corporate purposes. Upon any such vote the
holders of Common Stock shall be entitled to one vote for each share of
Common Stock held by them respectively.
D. REQUISITE VOTES.
Subject to such voting rights and requisite votes as may be determined
by the Board of Directors pursuant to paragraph (1) of Division B of
Article III, the requisite affirmative votes necessary to adopt
amendments to these Articles of Incorporation and for all other purposes
provided in Section 180.25(2) of or otherwise provided in the Wisconsin
Statutes (1977) shall be the affirmative vote of the holders of a
majority of shares entitled to vote on the proposal.
E. PREEMPTIVE RIGHTS.
Except as the Board of Directors of the Company may otherwise
determine from time to time, no shareholder of the Company shall have
any preferential or preemptive right to subscribe for or purchase from
the Company any new or additional shares of capital stock of the Company
or securities convertible into shares of capital stock, whether now or
hereafter authorized.
ARTICLE IV
Board of Directors
A. POWERS, NUMBER AND CLASSIFICATION.
The general powers, number, classification, tenure and qualifications
of Company directors shall be as set forth in Sections 3.1 and 3.2 of
Article III of the By-laws (as such Sections shall exist from time to
time). Sections 3.1 and 3.2 of the By-laws, or any provision thereof,
shall be amended, altered, changed or repealed only by the affirmative
vote of shareholders holding at least seventy-five percent (75%) of the
voting power of the then outstanding shares of all classes of capital
stock of the Company generally possessing voting rights in the election
of directors, considered for this purpose as a single class; provided,
however, that the Board of Directors, by resolution adopted by the
Requisite Vote (as hereinnafter defined), may amend, alter, change or
repeal Sections 3.1 and 3.2 of the By-laws, or any provision thereof,
without a vote of the shareholders. As used herein, the term "Requisite
Vote" shall mean the affirmative vote of the number of directors in the
two largest classes of directors provided for in Section 3.1 of the By-
laws, plus one director.
B. REMOVAL OF DIRECTORS.
Any director may be removed from office, but only for Cause (as
hereinafter defined) by the affirmative vote of shareholders holding at
least a majority of the voting power of the then outstanding shares of
all classes of capital stock of the Company generally possessing voting
rights in the election of directors, considered for this purpose as a
single class; provided, however, that if the Board of Directors by
resolution adopted by the Requisite Vote shall have recommended removal
of a director, then the shareholders may remove such director from
office by the foregoing vote without Cause. As used herein, "Cause"
shall exist only if the director whose removal is proposed (i) has been
convicted of a felony by a court of competent jurisdiction and such
conviction is no longer subject to direct appeal or (ii) has been
adjudged by a court of competent juridisdiction to be liable for willful
misconduct in the performance of his duties to the Company in a matter
which has a material adverse effect on the business of the Company and
such adjudication is no longer subject to direct appeal.
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<PAGE> 6
C. VACANCIES.
Any vacancy occurring in the Board of Directors including a vacancy
created by the removal of a director or an increase in the number of
directors, shall be filled by the affirmative vote of a majority of the
directors then in office, although less than a quorum of the Board of
Directors. Any director so elected shall serve until the next election
of the class for which such director shall have been chosen and until
his successor shall be elected be qualified.
D. AMENDMENTS.
(1) Notwithstanding any other provision of these Articles of
Incorporation, the provision of this Article IV shall be amended,
altered, changed or repealed only by the affirmative vote of
shareholders holding at least seventy-five percent (75%) of the voting
power of the then outstanding shares of all classes of capital stock of
the Company generally possessing voting rights in the election of
directors, considered for this purpose as a single class.
(2) Notwithstanding the foregoing and any provision in the By-laws of
the Company, whenever the holders of any one or more series of
Cumulative Preferred Stock issued by the Company pursuant to Article III
hereof shall have the right, voting separately as a class or by series,
to elect directors at an annual or special meeting of shareholders, the
election, term of office, filling of vacancies and other features of
such directorships shall be governed by the terms of the series of
Cumulative Preferred Stock applicable thereto, and such directors so
elected shall not be divided into classes unless expressly provided by
the terms of the applicable series.
ARTICLE V
REGISTERED OFFICE AND AGENT
The address of the registered office of the Company is 626 East
Wisconsin Avenue, P.O. Box 344, Milwaukee, Wisconsin 53201 and the name
of the registered agent is Robert A. Nuernberg.
<PAGE> 1
EXHIBIT 10-1
WICOR, INC.
1994 LONG-TERM PERFORMANCE PLAN
(as amended and restated)
Section 1. Purpose
The purpose of the WICOR, Inc. 1994 Long-Term Performance Plan (the
"Plan") is to enhance the ability of WICOR, Inc. (together with any successor
thereto, the "Company") and its Affiliates (as defined below) to attract,
retain and motivate key salaried employees upon whom, in large measure, the
sustained growth and profitability of the Company depend and to provide
incentives to such key salaried employees which are more directly linked to
the profitability of the Company's businesses and increases in shareholder
value.
Section 2. Definitions
As used in the Plan, the following terms shall have the respective
meanings set forth below:
(a) "Affiliate" shall mean any entity that, directly or through one or
more intermediaries, is controlled by, controls, or is under common control
with, the Company.
(b) "Award" shall mean any Option, Stock Appreciation Right or
Restricted Stock granted under the Plan.
(c) "Award Agreement" shall mean any written agreement, contract, or
other instrument or document evidencing any Award granted under the Plan.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(e) "Commission" shall mean the United States Securities and Exchange
Commission or any successor agency.
(f) "Committee" shall mean a committee of the Board of Directors of
the
Company designated by such Board to administer the Plan and composed of not
less than three directors, each of whom is a "non-employee director" within
the meaning of Rule 16b-3.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(h) "Fair Market Value" shall mean, with respect to any property
(including, without limitation, any Shares or other securities), the fair
market value of such property determined by such methods or procedures as
shall be established from time to time by the Committee.
(i) "Incentive Stock Option" shall mean an Option granted under
Section
6(a) of the Plan that is intended to meet the requirements of Section 422 of
the Code, or any successor provision thereto.
(j) "Key Salaried Employee" shall mean any officer or other key
salaried
employee of the Company or of an Affiliate who is responsible for or
contributes to the management, growth or profitability of the business of the
Company or any Affiliate as determined by the Committee
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(k) "Non-Qualified Stock Option" shall mean an Option granted under
Section 6(a) of the Plan that is not intended to be an Incentive Stock Option.
(l) "Option" shall mean an Incentive Stock Option or a Non-Qualified
Stock Option
(m) "Participant" shall mean a Key Salaried Employee designated to be
granted an Award under the Plan.
(n) "Person" shall mean any individual, corporation, partnership,
association, limited liability company, joint-stock company, trust,
unincorporated organization, or government or political subdivision thereof.
(o) "Released Securities" shall mean Shares of Restricted Stock with
respect to which all applicable restrictions have expired, lapsed, or been
waived.
(p) "Restricted Securities" shall mean Awards of Restricted Stock or
other Awards under which issued and outstanding Shares are held subject to
certain restrictions.
(q) "Restricted Stock" shall mean any Shares granted under Section
6(c)of the Plan.
(r) "Rule 16b-3" shall mean Rule 16b-3 as promulgated by the
Commission
under the Exchange Act, or any successor rule or regulation thereto.
(s) "Shares" shall mean shares of common stock of the Company and such
other securities or property as may become subject to Awards pursuant to an
adjustment made under Section 4(b) of the Plan.
(t) "Stock Appreciation Right" shall mean any right granted under
Section
6(b) of the Plan.
(u) "Total Shareholder Return" shall mean the appreciation of the
price of a share of common stock of the Company, plus the value of dividends
paid
thereon assuming reinvestment in common stock of the Company.
<PAGE>
<PAGE> 3
Section 3. Administration
The Plan shall be administered by the Committee; provided, however, that
if at any time the Committee shall not be in existence, the functions of the
Committee as specified in the Plan shall be exercised by those members of the
Board of Directors of the Company who qualify as "non-employee directors"
under Rule 16b-3. Subject to the terms of the Plan and applicable law, the
Committee shall have full power and authority to: (i) designate Participants;
(ii) determine the type or types of Awards to be granted to each Participant
under the Plan; (iii) determine the number of Shares to be covered by (or with
respect to which payments, rights, or other matters are to be calculated in
connection with) Awards granted to Participants; (iv) determine the terms and
conditions of any Award granted to a Participant; (v) determine whether, to
what extent, and under what circumstances Awards granted to Participants may
be settled or exercised in cash, Shares, other securities, other Awards, or
other property, or canceled, forfeited, or suspended to the extent permitted
in Section 7 of the Plan, and the method or methods by which Awards may be
settled, exercised, canceled, forfeited, or suspended; (vi) determine whether,
to what extent, and under what circumstances cash, Shares, other securities,
other Awards, other property, and other amounts payable with respect to an
Award granted to Participants under the Plan shall be deferred either
automatically or at the election of the holder thereof or of the Committee;
(vii) interpret and administer the Plan and any instrument or agreement
relating to, or Award made under, the Plan (including, without limitation, any
Award Agreement); (viii) establish, amend, suspend, or waive such rules and
regulations and appoint such agents as it shall deem appropriate for the
proper administration of the Plan; and (ix) make any other determination and
take any other action that the Committee deems necessary or desirable for the
administration of the Plan. Unless otherwise expressly provided in the Plan,
all designations, determinations, interpretations, and other decisions under
or with respect to the Plan or any Award shall be within the sole discretion
of the Committee, may be made at any time, and shall be final, conclusive, and
binding upon all Persons, including the Company, any Affiliate, any
Participant, any holder or beneficiary of any Award, any shareholder, and any
employee of the Company or of any Affiliate.
The Committee shall solicit and consider the recommendations of the
Chief Executive Officer of the Company with regard to, among other things, the
designation of Participants, the type of Awards to be granted under the Plan
to such Participants and the number of Shares to be subject thereto, and the
other terms and conditions of Awards granted to Participants, subject to the
limitations of Rule 16b-3.
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<PAGE> 4
Section 4. Shares Available for Award
(a) Shares Available. Subject to adjustment as provided in Section
4(b):
(i) Number of Shares Available. The total number of Shares with
respect to which Awards may be granted under the Plan shall be 1,745,000. If,
after the effective date of the Plan, any Shares covered by an Award granted
under the Plan, or to which any Award relates, are forfeited or if an Award
otherwise terminates, expires or is canceled prior to the delivery of all of
the Shares or of other consideration issuable or payable pursuant to such
Award and if such forfeiture, termination, expiration or cancellation occurs
prior to the payment of dividends or the exercise by the holder of other
indicia of ownership of the Shares to which the Award relates, then the number
of Shares counted against the number of Shares available under the Plan in
connection with the grant of such Award, to the extent of any such forfeiture,
termination, expiration or cancellation, shall again be available for granting
of additional Awards under the Plan; provided, however, that if an Award
covering additional Shares is granted to a Participant in connection with such
forfeiture, termination, expiration or cancellation, then the Shares subject
to the forfeiture, termination, expiration or cancellation shall be counted
against the total number of Shares with respect to which Awards may be granted
under the Plan and the maximum number of Shares that may be the subject of
Awards granted to individual Participants under the Plan in an amount equal to
the number of Shares to which such additional grant relates.
(ii) Limitation on Awards to Individual Participants. During any
one calendar year, no Participant shall be granted Awards Options for, or
Stock Appreciation Rights with respect to, more than 150,000 Shares or receive
more than 10,000 Shares of Restricted Stock under the Plan.
(iii) Accounting for Awards. The number of Shares covered by an
Award under the Plan, or to which such Award relates, shall be counted on the
date of grant of such Award against the number of Shares available for
granting Awards under the Plan; provided, however, that if Options and Stock
Appreciation Rights are granted in tandem and the exercise of either an Option
or Stock Appreciation Right results in an offsetting reduction in the number
of Options or Stock Appreciation Rights subject to the Award, then the number
of Shares to which such Award relates shall only be counted against the number
of Shares available for granting Awards under the Plan to the extent of the
aggregate number of Shares as to which such Award may be exercised
(iv) Sources of Shares Deliverable Under Awards. Any Shares
delivered pursuant to an Award may consist, in whole or in part, of authorized
and unissued Shares or of treasury Shares
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<PAGE> 5
(b) Adjustments. In the event that the Company shall pay a dividend on
its common stock in Shares, effect a stock split, or effect a similar
corporate transaction or event that affects the Shares such that an adjustment
is determined by the Committee to be appropriate in order to prevent dilution
or enlargement of the benefits or potential benefits intended to be made
available under the Plan, then the number of Shares subject to the Plan and
which thereafter may be made the subject of Awards and the number of Shares
subject to outstanding Awards under the Plan, and the exercise and grant
prices thereof, shall be equitably adjusted by the Committee such that the
number of Shares, as adjusted, shall bear the same relation to the total
number of outstanding shares of common stock of the Company following the
transaction or event as immediately prior to such transaction or event;
provided, however, that the number of Shares subject to any Award payable or
denominated in Shares shall always be a whole number.
Section 5. Eligibility
Any Key Salaried Employee, including any executive officer or employee
who is also a director of the Company or of any Affiliate, who is not a member
of the Committee shall be eligible to be designated a Participant.
Section 6. Awards
(a) Options. The Committee is hereby authorized to grant Options to
Participants with the terms and conditions as set forth below and with such
additional terms and conditions, in either case not inconsistent with the
provisions of the Plan, as the Committee shall determine; provided, however,
that no Option shall be granted, directly or indirectly, in connection with
the forfeiture, termination, cancellation or expiration of an Option
previously granted under the Plan prior to its normal expiration date if such
forfeited, terminated, canceled or expired Option has an exercise price higher
than the Option proposed to be granted.
(i) Exercise Price. The exercise price per share under an Option
shall be determined by the Committee; provided, however, that such exercise
price shall not be less than 100% of the Fair Market Value of a Share on the
date of grant of such Option; and provided further, that such exercise price
shall not be adjusted following the date of grant of such Option except as
provided in Section 4(b) hereof.
(ii) Option Term. The term of each Option shall be fixed by the
Committee; provided, however, that in no event shall the term of any Option
exceed a period of ten years from the date of its grant.
(iii) Exercisability and Method of Exercise. An Option shall
become exercisable in such manner and within such period or periods and in
such installments or otherwise as shall be determined by the Committee. The
Committee also shall determine the method or methods by which, and the form or
forms, including, without limitation, cash, Shares, other securities, other
Awards, or other property, or any combination thereof, having a Fair Market
value on the exercise date equal to the relevant exercise price, in which
payment of the exercise price with respect to any Option may be made or deemed
to have been mad
<PAGE>
<PAGE> 6
(iv) Incentive Stock Options. The terms of any Incentive Stock
Option granted under the Plan shall comply in all respects with the provisions
of Section 422 of the Code, or any successor provision thereto, and any
regulations promulgated thereunder.
(b) Stock Appreciation Rights. The Committee is hereby authorized to
grant Stock Appreciation Rights to Participants. Subject to the terms of the
Plan and any applicable Award Agreement, a Stock Appreciation Right granted
under the Plan shall confer on the holder thereof a right to receive, upon
exercise thereof, the excess of (i) the Fair Market Value of one Share on the
date of exercise over (ii) the grant price of the right as specified by the
Committee, which shall not be less than the Fair Market Value of one Share on
the date of grant of the Stock Appreciation right. Subject to the terms of the
Plan, the grant price, term, methods of exercise, methods of settlement
(including whether the Participant will be paid in cash or Shares, or a
combination thereof), and any other terms and conditions of any Stock
Appreciation Right shall be as determined by the Committee; provided, however,
that the grant price of a Stock Appreciation Right may not be adjusted
following the date of grant of such Stock Appreciation Right except as
provided in Section 4(b) hereof. The Committee may impose such conditions or
restrictions on the exercise of any Stock Appreciation Right as it may deem
appropriate, including, without limitation, restricting the time of exercise
of the Stock Appreciation Right to specified periods as may be necessary to
satisfy the requirements of Rule 16b-3.
(c) Restricted Stock Awards
(i) Issuance. The Committee is hereby authorized to grant Awards
of Restricted Stock to Participants.
(ii) Restrictions. Shares of Restricted Stock granted to
Participants shall be subject to such restrictions as the Committee may
impose, which restrictions may lapse separately or in combination at such time
or times, in such installments or otherwise, as the Committee may deem
appropriate.
(iii) Performance Criteria. The restrictions applicable to
participants shall be based on the criteria of attaining a compounded annual
percentage rate of Total Shareholder Return as determined by the Committee.
(iv) Registration. Any Restricted Stock granted under the Plan to
a Participant may be evidenced in such manner as the Committee may deem
appropriate. In the event any stock certificate is issued in respect of Shares
of Restricted Stock granted under the Plan to a Participant, such certificate
shall be registered in the name of the Participant and shall bear an
appropriate legend (as determined by the Committee) referring to the terms,
conditions, and restrictions applicable to such Restricted Stock.
(v) Payment of Restricted Stock. At the end of the applicable
restriction period relating to Restricted Stock granted to a Participant, one
or more stock certificates for the appropriate number of Shares, free of
restrictions, shall be delivered to the Participant, or, if the Participant
received stock certificates representing the Restricted Stock at the time of
grant, the legends placed on such certificates shall be remove.
(vi) Forfeiture. Except as otherwise determined by the Committee,
upon termination of employment of a Participant (as determined under criteria
established by the Committee) for any reason during the applicable restriction
period, all Shares of Restricted Stock still subject to restriction shall be
forfeited by the Participant and reacquired by the Company
<PAGE>
<PAGE> 7
(d) General.
(i) No Consideration for Awards. Awards shall be granted to
Participants for no cash consideration unless otherwise determined by the
Committee.
(ii) Award Agreements. Each Award granted under the Plan shall be
evidenced by an Award Agreement in such form (consistent with the terms of the
Plan) as shall have been approved by the Committee.
(iii) Awards May Be Granted Separately or Together. Awards to
Participants under the Plan may be granted either alone or in addition to, in
tandem with, or in substitution for any other Award or any award granted under
any other plan of the Company or any Affiliate. Awards granted in addition to
or in tandem with other Awards, or in addition to or in tandem with awards
granted under any other plan of the Company or any Affiliate, may be granted
either at the same time as or at a different time from the grant of such other
Awards or awards.
(iv) Limits on Transfer of Awards. No Award (other than Released
Securities), and no right under any such Award, shall be assignable,
alienable, salable, or transferable by a Participant otherwise than by will or
by the laws of descent and distribution (or, in the case of an Award of
Restricted Securities, to the Company); provided, however, that a Participant
at the discretion of the Committee may be entitled, in the manner established
by the Committee, to designate a beneficiary or beneficiaries to exercise his
or her rights, and to receive any property distributable, with respect to any
Award upon the death of the Participant. Each Award, and each right under any
Award, shall be exercisable, during the lifetime of the Participant, only by
such individual or, if permissible under applicable law, by such individual's
guardian or legal representative. No Award (other than Released Securities),
and no right under any such Award, may be pledged, alienated, attached, or
otherwise encumbered, and any purported pledge, alienation, attachment, or
encumbrance thereof shall be void and unenforceable against the Company or any
Affiliate.
(v) Term of Awards. Except as otherwise provided in the Plan,
the term of each Award shall be for such period as may be determined by the
Committee.
(vi) Rule 16b-3 Six-Month Limitations. To be extent required in
order to comply with Rule 16b-3 only, any equity security offered pursuant to
the Plan may not be sold for at least six months after acquisition, except in
the case of death or disability, and any derivative security issued pursuant
to the Plan shall not be exercisable for at least six months, except in case
of death or disability of the holder thereof. Terms used in the preceding
sentence shall, for the purposes of such sentence only, have the meanings, if
any, assigned or attributed to them under Rule 16b-3
<PAGE>
<PAGE> 8
(vii) Share Certificates; Representation by Participants. In
addition to the restrictions imposed pursuant to Section 6(c) hereof, all
certificates for Shares delivered under the Plan pursuant to any Award or the
exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the rules,
regulations, and other requirements of the Commission, any stock exchange or
other market upon which such Shares are then listed or traded, and any
applicable federal or state securities laws, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions. The Committee may require each Participant or
other Person who acquires Shares under the Plan by means of an Award
originally made to a Participant to represent to the Company in writing that
such Participant or other Person is acquiring the Shares without a view to the
distribution thereof.
Section 7. Amendment and Termination; Waiver of Conditions
(a) Amendments to the Plan. The Board of Directors of the Company may
amend, alter, suspend, discontinue, or terminate the Plan at any time;
provided, however, that no amendment, alteration, suspension, discontinuation
or termination of the Plan shall in any manner (except as otherwise provided
in this Section 7) adversely affect any Award granted and then outstanding
under the Plan without the consent of the Participant; provided further that,
notwithstanding any other provision of the Plan or any Award Agreement,
without the approval of the shareholders of the Company, no amendment,
alterations, suspension, discontinuation, or termination of the Plan shall be
made that would:
(i) increase the total number of Shares available for Awards
under the Plan or the maximum number of Shares with respect to which Awards
may be made to individual Participants, except as provided in Section 4(b)
hereof;
(ii) modify the performance criteria pursuant to which Restricted
Stock vests;
(iii) materially increase the benefits accruing to Participants
under the Plan; or
(iv) Materially modify the requirements as to eligibility for
participation in the Plan.
(b) Adjustments of Awards Upon Certain Acquisitions. In the event the
Company or any Affiliate shall assume outstanding employee awards or the right
or obligation to make future such awards in connection with the acquisition of
another business or another corporation or business entity, the Committee may
make such adjustments, not inconsistent with the terms of the Plan, in the
terms of Awards granted to Participants as it shall deem appropriate in order
to achieve reasonable comparability or other equitable relationship between
the assumed awards and the Awards granted under the Plan to Participants as so
adjusted.
(C) Correction of Defects, Omissions, and Inconsistencies. The
Committee
may correct any defect, supply any omission, or reconcile any inconsistency in
any Award or Award Agreement in the manner and to the extent it shall deem
necessary or desirable to carry the Plan into effec
<PAGE>
<PAGE> 9
Section 8. General Provisions
(a) No Rights to Awards. No Key Salaried Employee, Participant or
other
Person shall have any claim to be granted any Award under the Plan, and there
is no obligation for uniformity of treatment of Key Salaried Employees,
Participants, or holders or beneficiaries of Awards under the Plan. The terms
and conditions of Awards need not be the same with respect to each
Participant.
(b) Withholding. No later than the date as of which an amount first
becomes includible in the gross income of a Participant for federal income tax
purposes with respect to any Award under the Plan, the Participant shall pay
to the Company, or make arrangements satisfactory to the Company regarding the
payment of, any federal, state, local or foreign taxes of any kind required by
law to be withheld with respect to such amount. Unless otherwise determined by
the Committee, withholding obligations arising with respect to Awards to
Participants under the Plan may be settled with Shares (other than Restricted
Securities), including Shares that are part of, or are received upon exercise
of, the Award that gives rise to the withholding requirement. The obligations
of the Company under the Plan shall be conditional on such payment or
arrangements, and the Company and any Affiliate shall, to the extent permitted
by law, have the right to deduct any such taxes from any payment otherwise due
to the Participant. The Committee may establish such procedures as it deems
appropriate for the settling of withholding obligations with Shares,
including, without limitation, the establishment of such procedures as may be
necessary to satisfy the requirements of Rule 16b-3.
(c) No Limit on Other Compensation Arrangements. Nothing contained in
the Plan shall prevent the Company or any Affiliate from adopting or
continuing in effect other or additional compensation arrangements, and such
arrangements may be either generally applicable or applicable only in specific
cases.
(d) Rights and Status of Recipients of Awards. The grant of an Award
shall not be construed as giving a Participant the right to be retained in the
employ of the Company or any Affiliate. Further, the Company or any Affiliate
may at any time dismiss a Participant from employment, free from any
liability, or any claim under the Plan. Except for rights accorded under the
Plan and under any applicable Award Agreement, Participants shall have no
rights as holders of Shares as a result of the granting of Awards hereunder.
(e) Unfunded Status of the Plan. Unless otherwise determined by the
Committee, the Plan shall be unfunded and shall not create (or be construed to
create) a trust or a separate fund or funds. The Plan shall not establish any
fiduciary relationship between the Company and any Participant or other
Person. To the extent any Person holds any right by virtue of a grant under
the Plan, such right (unless otherwise determined by the Committee) shall be
no greater than the right of an unsecured general creditor of the Company.
(f) Governing Law. The validity, construction, and effect of the Plan
and any rules and regulations relating to the Plan shall be determined in
accordance with the internal laws of the State of Wisconsin and applicable
federal law
<PAGE>
<PAGE> 10
(g) Severability. If any provision of the Plan or any Award Agreement
or any Award is or becomes or is deemed to be invalid, illegal, or
unenforceable in any jurisdiction, or as to any Person or Award, or would
disqualify the Plan, any Award Agreement or any Award under any law deemed
applicable by the Committee, such provision shall be construed or deemed
amended to conform to applicable laws, or if it cannot be so construed or
deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan, any Award Agreement or the Award, such
provision shall be stricken as to such jurisdiction, Person, or Award, and the
remainder of the Plan, any such Award Agreement and any such Award shall
remain in full force and effect.
(h) No Fractional Shares. No fraction Shares or other securities shall
be issued or delivered pursuant to the Plan, any Award Agreement or any Award,
and the Committee shall determine (except as otherwise provided in the Plan)
whether cash, other securities, or other property shall be paid or transferred
in lieu of any fractional Shares or other securities or any rights thereto
shall be canceled, terminated, or otherwise eliminated.
(i) Headings. Headings are given to the Sections and subsections of
the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
Section 9. Effective Date of the Plan
The Plan shall be effective as of March 1, 1994, subject, however, to
the approval of the plan by the shareholders of the Company at the next annual
meeting of shareholders, or any adjournment thereof, within twelve months
following the date of adoption of the Plan by the Board of Directors of the
Company.
Section 10. Term of the Plan
No Award shall be granted under the Plan after March 1, 2004. However,
unless otherwise expressly provided in the Plan or in an applicable Award
Agreement, any Award theretofore granted may extend beyond such date, and, to
the extent set forth in the Plan, the authority of the Committee to amend,
alter, adjust, suspend, discontinue, or terminate any such award, or to waive
any conditions or restrictions with respect to any such Award, and the
authority of the Board of Directors of the Company to amend the Plan, shall
extend beyond such date
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the WICOR,
Inc. FORM 10-Q for the six months ended June 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 375,363
<OTHER-PROPERTY-AND-INVEST> 65,742
<TOTAL-CURRENT-ASSETS> 310,059
<TOTAL-DEFERRED-CHARGES> 208,193
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 959,357
<COMMON> 37,330
<CAPITAL-SURPLUS-PAID-IN> 215,994
<RETAINED-EARNINGS> 162,857
<TOTAL-COMMON-STOCKHOLDERS-EQ> 404,961
0
0
<LONG-TERM-DEBT-NET> 149,042
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 110,000
<COMMERCIAL-PAPER-OBLIGATIONS> 9,070
<LONG-TERM-DEBT-CURRENT-PORT> 43,667
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 352,617
<TOT-CAPITALIZATION-AND-LIAB> 959,357
<GROSS-OPERATING-REVENUE> 523,206
<INCOME-TAX-EXPENSE> 18,983
<OTHER-OPERATING-EXPENSES> 466,317
<TOTAL-OPERATING-EXPENSES> 485,300
<OPERATING-INCOME-LOSS> 37,906
<OTHER-INCOME-NET> 1,666
<INCOME-BEFORE-INTEREST-EXPEN> 39,572
<TOTAL-INTEREST-EXPENSE> 8,585
<NET-INCOME> 30,987
0
<EARNINGS-AVAILABLE-FOR-COMM> 30,987
<COMMON-STOCK-DIVIDENDS> 16,029
<TOTAL-INTEREST-ON-BONDS> 476
<CASH-FLOW-OPERATIONS> 125,982
<EPS-PRIMARY> 0.83
<EPS-DILUTED> 0.82
</TABLE>
