UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1994
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission file number 1-7297
NICOR Inc.
(Exact name of registrant as specified in its charter)
Illinois 36-2855175
(State of incorporation) (I.R.S. Employer
Identification No.)
1844 Ferry Road
Naperville, Illinois 60563-9600
(Address of principal (Zip Code)
executive offices)
(708)305-9500
(Registrant's telephone number)
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 and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Shares of common stock, par value $2.50 outstanding, at October 31, 1994,
were 52,017,142.
NICOR Inc. Page i
Table of Contents
Page
Part I. Financial Information
Item 1. Financial Statements (Unaudited) 1
Consolidated Statement of Income -
Three, Nine and Twelve Months Ended
September 30, 1994 and 1993 2
Consolidated Statement of Cash Flows -
Nine and Twelve Months Ended
September 30, 1994 and 1993 3
Consolidated Balance Sheet -
September 30, 1994 and 1993, and
December 31, 1993 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8
Part II. Other Information
Item 1. Legal Proceedings 14
Item 6. Exhibits and Reports on Form 8-K 14
Signature 15
Exhibit Index 16
Selected terms used in this report:
Mcf, Bcf - Thousand cubic feet, billion cubic feet.
TEU - Twenty-foot equivalent unit.
Degree days - Number of degrees by which the daily
mean temperature falls below 65 degrees
Fahrenheit.
FERC - Federal Energy Regulatory Commission.
Ill.C.C. - Illinois Commerce Commission.
NICOR Inc. Page 1
PART I - Financial Information
Item 1. Financial Statements
The following condensed unaudited financial statements of
NICOR Inc. have been prepared by the company pursuant to the rules
and regulations of the Securities and Exchange Commission (SEC).
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
SEC rules and regulations. The condensed financial statements
should be read in conjunction with the financial statements and the
notes thereto included in the company's latest Annual Report on
Form 10-K.
The information furnished reflects, in the opinion of the company,
all adjustments (consisting only of normal recurring adjustments)
necessary for a fair statement of the results for the interim
periods presented. Because of seasonal and other factors, the
results for the interim periods presented are not necessarily
indicative of the results to be expected for the full fiscal year.
<TABLE>
NICOR Inc. Page 2
Consolidated Statement of Income (Unaudited)
(Millions, except per share data)
<CAPTION>
Three months ended Nine months ended Twelve months ended
September 30 September 30 September 30
1994 1993 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Operating revenues $ 166.0 $ 185.5 $1,213.8 $1,136.2 $1,751.6 $ 1,702.9
Operating expenses
Cost of gas 57.7 78.1 715.1 663.2 1,059.0 1,039.8
Operating and maintenance 66.0 62.2 201.4 186.8 270.7 250.8
Depreciation 13.3 12.5 71.7 66.1 102.2 96.1
Taxes, other than income taxes 10.8 11.6 91.4 85.1 122.4 118.2
147.8 164.4 1,079.6 1,001.2 1,554.3 1,504.9
Operating income 18.2 21.1 134.2 135.0 197.3 198.0
Other income (expense)
Interest income .7 .4 1.9 1.4 2.3 2.1
Other, net .5 2.4 2.4 2.4 5.1 (4.8)
1.2 2.8 4.3 3.8 7.4 (2.7)
Income before interest on debt
and income taxes 19.4 23.9 138.5 138.8 204.7 195.3
Interest on debt, net of
amounts capitalized 9.5 9.1 28.3 30.6 39.0 43.2
Income before income taxes 9.9 14.8 110.2 108.2 165.7 152.1
Income taxes 2.4 5.6 35.5 35.9 53.8 48.6
Income from continuing operations 7.5 9.2 74.7 72.3 111.9 103.5
Discontinued operations, net
of income taxes
Income from operations - - - 2.3 - 5.8
Gain on disposal, net - - - - - 4.7
- - - 2.3 - 10.5
Net income 7.5 9.2 74.7 74.6 111.9 114.0
Dividends on preferred and
preference stock .1 .3 .4 .8 .7 1.1
Earnings applicable to
common stock $ 7.4 $ 8.9 $ 74.3 $ 73.8 $ 111.2 $ 112.9
Average shares of common
stock outstanding 52.2 54.9 52.9 55.4 53.2 55.5
Earnings per average share
of common stock
Continuing operations $ .14 $ .16 $ 1.40 $ 1.29 $ 2.09 $ 1.85
Discontinued operations - - - .04 - .19
$ .14 $ .16 $ 1.40 $ 1.33 $ 2.09 $ 2.04
Dividends declared per share
of common stock $ .315 $ .305 $ .945 $ .915 $ 1.25 $ 1.21
<F1>
The accompanying notes are an integral part of this statement.
</TABLE>
<TABLE>
NICOR Inc. Page 3
Consolidated Statement of Cash Flows (Unaudited)
(Millions)
<CAPTION>
Nine months ended Twelve months ended
September 30 September 30
1994 1993 1994 1993
Operating activities
<S> <C> <C> <C> <C>
Net income $ 74.7 $ 74.6 $ 111.9 $ 114.0
Less income from discontinued operations - 2.3 - 10.5
Income from continuing operations 74.7 72.3 111.9 103.5
Adjustments to reconcile income from continuing operations
to net cash flow provided from continuing operations:
Depreciation 71.7 66.1 102.2 96.1
Deferred income tax expense (benefit) (23.6) (18.8) (18.7) (29.7)
122.8 119.6 195.4 169.9
Change in working capital items and other:
Receivables, less allowances 177.0 181.0 8.3 (23.3)
Gas in storage (14.9) 6.9 1.2 15.9
Deferred gas costs 42.2 (35.4) 63.1 (19.3)
Accounts payable 8.5 9.9 11.6 9.5
Taxes payable/receivable (21.1) (3.3) (21.1) 13.4
Other (5.7) (2.0) (4.5) 20.7
Net cash flow provided from continuing operations 308.8 276.7 254.0 186.8
Net cash flow provided from (used for) discontinued operations 1.9 (11.2) .8 (3.5)
Net cash flow provided from operating activities 310.7 265.5 254.8 183.3
Investing activities
Capital expenditures (115.9) (96.7) (160.9) (136.6)
Short- and long-term investments 29.9 (6.9) 19.5 (15.8)
Proceeds from sales of discontinued operations - 135.0 4.9 160.1
Other investing activities of discontinued operations - (6.2) .7 (11.6)
Other .9 (.7) 3.4 2.8
Net cash flow provided from (used for) investing activities (85.1) 24.5 (132.4) (1.1)
Financing activities
Net proceeds from issuing long-term debt 99.2 223.1 111.7 223.0
Disbursements to retire long-term debt (50.0) (258.8) (53.8) (258.8)
Short-term borrowings (repayments), net (170.8) (171.5) (38.3) (47.0)
Dividends paid (50.4) (51.2) (67.3) (67.9)
Disbursements to reacquire stock (56.3) (42.4) (73.9) (44.9)
Other .5 6.6 1.0 7.4
Net cash flow used for financing activities (227.8) (294.2) (120.6) (188.2)
Net increase (decrease) in cash and cash equivalents (2.2) (4.2) 1.8 (6.0)
Cash and cash equivalents, beginning of period 10.5 10.7 6.5 12.5
Cash and cash equivalents, end of period $ 8.3 $ 6.5 $ 8.3 $ 6.5
<F1>
The accompanying notes are an integral part of this statement.
</TABLE>
<TABLE>
NICOR Inc. Page 4
Consolidated Balance Sheet (Unaudited)
(Millions)
<CAPTION>
September 30, December 31, September 30,
Assets 1994 1993 1993
Current assets
<S> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents $ 8.3 $ 10.5 $ 6.5
Short-term investments, at cost which approximates
market 21.7 51.6 41.9
Receivables, less allowances of $6.1, $6.8 and $6.0,
respectively 100.2 277.2 108.8
Gas in storage, at last-in, first-out cost 112.7 97.8 113.9
Deferred gas costs 14.7 56.9 77.8
Other 38.6 15.0 21.7
296.2 509.0 370.6
Property, plant and equipment, at cost
Gas distribution 2,678.4 2,664.1 2,631.5
Shipping 224.2 219.8 222.8
Other .2 .2 .1
2,902.8 2,884.1 2,854.4
Less accumulated depreciation 1,206.7 1,227.9 1,207.3
1,696.1 1,656.2 1,647.1
Other assets 66.3 56.9 56.9
$ 2,058.6 $ 2,222.1 $ 2,074.6
Liabilities and Capitalization
Current liabilities
Long-term obligations due within one year $ 50.3 $ .3 $ .4
Short-term borrowings 133.2 304.0 171.5
Accounts payable 236.0 229.0 228.4
Other 31.7 51.0 42.1
451.2 584.3 442.4
Deferred credits and other liabilities
Deferred income taxes 171.3 168.2 167.5
Regulatory income tax liability 91.3 95.5 100.2
Unamortized investment tax credits 54.3 55.9 56.5
Other 142.2 138.7 141.3
459.1 458.3 465.5
Capitalization
Long-term debt 458.9 458.9 450.3
Preferred and preference stock
Redeemable 9.3 16.6 16.6
Nonredeemable .1 .1 .1
Common equity
Common stock 130.4 134.9 136.4
Paid-in capital 90.5 134.5 149.2
Retained earnings (since December 31, 1985) 459.1 434.5 414.1
1,148.3 1,179.5 1,166.7
$ 2,058.6 $ 2,222.1 $ 2,074.6
<F1>
The accompanying notes are an integral part of this statement.
</TABLE>
NICOR Inc. Page 5
Notes To Consolidated Financial Statements (Unaudited)
ACCOUNTING POLICIES
Depreciation. Depreciation for the gas distribution segment is calculated
using a straight-line method for the calendar year. For interim periods,
depreciation is allocated based on gas deliveries.
CASH FLOW INFORMATION
Income taxes paid, net of refunds, and interest paid, net of amounts
capitalized, for the periods ended September 30 were (millions):
Nine months Twelve months
1994 1993 1994 1993
Income taxes paid $65.9 $56.0 $81.4 $69.5
Interest paid 35.0 40.1 39.4 44.3
REGULATORY MATTERS
In April 1992, the FERC issued Order 636. This order, which required
implementation by the pipelines for the 1993-1994 heating season,
substantially restructured the interstate sale and transportation of gas.
The FERC also authorized pipelines to recover transition costs, such as gas
supply realignment and certain other costs, caused by compliance with Order
636. Virtually all of these costs are being included in pipeline
transportation rates as demand surcharges. Although Northern Illinois Gas'
major pipeline transporters have submitted cost recovery filings to the
FERC, the FERC has not completed action on all filings, and additional
filings to the FERC are expected. The transition costs Northern Illinois
Gas will ultimately incur over the next several years are dependent upon the
future market price of natural gas, pipeline negotiations with producers and
other factors and are uncertain at this time; however, the amount is
expected to be substantial.
In March 1994, the Ill.C.C. authorized Illinois local gas distribution
companies, including Northern Illinois Gas, to recover all prudently
incurred transition costs from their customers. In September 1994, upon
rehearing, the Ill.C.C. entered an order revising the method by which
certain of these costs are to be recovered. A petition by industrial
consumers for rehearing of the latest order has been denied. The company
has been recovering such costs through its Uniform Purchased Gas Adjustment
Clause.
The company believes that the changes required by Order 636 will not have a
material impact on its financial condition or results of operations.
Appropriate accruals for transition costs incurred through September 30,
1994 have been recorded.
NICOR Inc. Page 6
Notes To Consolidated Financial Statements (Unaudited)
(Continued)
SHORT- AND LONG-TERM DEBT
On August 1, 1994 the company replaced its $50 million long-term credit
agreement with short-term credit agreements.
In July 1994, Northern Illinois Gas redeemed $50 million of 8.70% First
Mortgage Bonds due in 1995 with proceeds from the issuance of $50 million of
5-1/2% unsecured Notes due in July 1995.
In August 1994, Northern Illinois Gas issued $50 million of 8-1/4% First
Mortgage Bonds due in 2024. The net proceeds from the sale of the bonds are
being used for general corporate purposes, including construction programs.
REDEEMABLE PREFERENCE STOCK
On May 1, 1994 the company redeemed its 7.9% preference stock at a price of
$505 per share.
CONTINGENCIES
In connection with the sale of the discontinued U.S. oil and gas exploration
and production operations, the company has agreed to indemnify the purchaser
against losses with respect to certain claims and litigation. The largest
potential liability relates to a dispute with the producer of gas from one
well who is claiming entitlement to Natural Gas Policy Act (NGPA) Section
108 prices, which are substantially higher than market prices, for
production since 1989. While the FERC initially upheld an Administrative
Law Judge's decision in favor of NICOR Exploration Company, it subsequently
reversed itself and found for the producer. The FERC has denied NICOR
Exploration Company's request for rehearing and NICOR Exploration Company
has filed its appeal of the matter with the Fifth Circuit Court of Appeals.
If NGPA 108 prices were determined to be applicable and the gas purchase
contracts were determined to be in effect, the estimated additional cost
including interest through September 30, 1994 could approximate $10 million.
The potential additional cost after September 30, 1994 is dependent on
production rates, the mechanical condition and economic life of the well,
the difference between market prices and NGPA 108 prices, and other factors
and therefore cannot be reasonably estimated at this time.
Current environmental laws require treatment of certain waste materials that
may have been generated by two barge-cleaning facilities previously owned
and operated by certain subsidiaries of NICOR. The company believes one
site has been remediated in accordance with an approved closure plan. The
post-closure ground water monitoring at this site and the evaluation and
cleanup of the other site is currently estimated to range from $10 million
to $15 million. The company is evaluating whether any of these costs will
be recoverable from insurance or other sources.
NICOR Inc. Page 7
Notes To Consolidated Financial Statements (Unaudited)
(Concluded)
CONTINGENCIES (Concluded)
Current environmental laws may require cleanup of certain former gas
manufacturing plant sites. Northern Illinois Gas currently owns 15
properties and formerly owned or leased 13 properties believed to be the
location of such sites. The company has presented information regarding
preliminary reviews of these sites to the Illinois Environmental Protection
Agency. More detailed investigations are currently in progress or planned
for 1995 at seven of the 28 sites. At another of the sites, the current
owner is seeking to allocate future cleanup costs to all former owners,
including Northern Illinois Gas.
The results of continued testing and analysis should determine to what
extent remediation is necessary and may provide a basis for estimating any
additional costs to be incurred. While such costs, based on industry
experience, could be significant, the company believes that any such costs
not recovered from prior owners or other sources will be recoverable by
Northern Illinois Gas through its rates. This belief is based upon, among
other things, an Ill.C.C. authorization allowing recovery of such costs by
the company and a generic order issued by the Ill.C.C. in September 1992.
The generic order states that Illinois utilities may pass through prudently
incurred gas manufacturing plant cleanup costs to ratepayers over a five-
year period, but denies the utilities' request to recover capital costs on
the uncollected balances. In December 1993, the generic order was upheld by
the Illinois Appellate Court. In January 1994, the company began recovery
of cleanup costs from its customers in accordance with an Ill.C.C.-approved
cost recovery plan. In April 1994, the Illinois Supreme Court agreed to
hear an appeal filed by a consumer group. The consumer group argues that no
cleanup costs should be recoverable from ratepayers. Northern Illinois Gas
and other utilities argue that they should be entitled to recover capital
costs in addition to cleanup costs.
Although unable to determine the outcome of these contingencies, management
believes that appropriate accruals have been recorded. Final disposition of
these matters is not expected to have a material impact on the company's
financial condition or results of operations.
DISCONTINUED OPERATIONS
Summarized financial results of the discontinued operations for the periods
ended September 30, 1993 were (in millions):
Nine months Twelve months
Operating revenues $15.9 $35.6
Income before income taxes $ 3.5 $ 9.2
Income taxes 1.2 3.4
Income from discontinued operations $ 2.3 $ 5.8
NICOR Inc. Page 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
OVERVIEW
The following discussion should be read in conjunction with the Management's
Discussion and Analysis section of the NICOR Inc. 1993 Annual Report on
Form 10-K.
NICOR's third quarter 1994 net income was $7.5 million, down from $9.2
million in 1993 due to lower operating results in the gas distribution
segment. Earnings per common share were $.14, compared with $.16 in the
third quarter of 1993.
Net income from continuing operations for the nine months ended
September 30, 1994 increased to $74.7 million from $72.3 million in 1993 due
primarily to lower interest expense. Earnings per common share from
continuing operations, which were $1.40, up from $1.29 a year ago, also
benefited from the company's common stock buy-back program. In June 1993,
NICOR sold its oil and gas operations. Including these discontinued
operations, NICOR's year-to-date September 30, 1993 net income was $74.6
million and earnings per common share were $1.33.
Net income from continuing operations for the twelve months ended
September 30, 1994 rose to $111.9 million from $103.5 million a year ago.
Earnings per common share from continuing operations were $2.09 compared
with $1.85 a year ago. The increase was due to an improvement in
nonoperating income and lower interest expense. Per share results also
benefited from the company's common stock buy-back program. Including
discontinued operations, net income for the twelve months ended
September 30, 1993 totalled $114 million and earnings per common share were
$2.04.
Operating income (loss) for the periods ended September 30 by business
segment was (millions):
Three months Nine months Twelve months
1994 1993 1994 1993 1994 1993
Gas distribution $ 15.6 $ 18.5 $125.8 $128.3 $185.2 $188.4
Shipping 3.7 3.5 11.5 9.9 17.1 13.8
Other (1.1) (.9) (3.1) (3.2) (5.0) (4.2)
$ 18.2 $ 21.1 $134.2 $135.0 $197.3 $198.0
NICOR Inc. Page 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
The following summarizes operating income comparisons by business segment:
- - Gas distribution operating income for the third quarter of 1994
decreased $2.9 million as a result of higher operating and
maintenance (O&M) expense and the adverse impact of warmer weather.
For the nine- and twelve-month periods, operating income decreased
$2.5 million and $3.2 million, respectively, due to higher O&M
expense and depreciation, partially offset by the impact of
increased deliveries.
- - Shipping operating income for the three-, nine- and twelve-month
periods increased $.2 million, $1.6 million and $3.3 million,
respectively, due to higher margins on containerized shipping and an
increase in chartering income, partially offset by an increase in
administrative and general expense.
The company believes that 1995 will hold several earnings challenges.
Capital expenditures in the gas distribution segment will exceed typical
levels in 1994 and 1995 primarily because of utility projects that will
enable the company to reduce gas costs to its customers. These expenditures
will result in increases in 1995 interest expense and depreciation. In
addition, 1994 includes positive factors, such as income tax benefits and a
small asset sale, not expected to recur in 1995.
RESULTS OF OPERATIONS
Details of various financial and operating information by segment can be
found in the tables on pages 12 and 13. The following summarizes the major
changes in NICOR's revenues and expenses.
Operating revenues decreased $19.5 million in the third quarter to $166
million due to the effect of lower gas costs, which are passed through to
customers, and the impact of warmer weather on the gas distribution segment.
For the nine- and twelve-month periods, operating revenues increased $77.6
million to $1,213.8 million and $48.7 million to $1,751.6 million,
respectively, due primarily to higher revenues in the gas distribution
segment. Higher gas costs and the positive impact of colder weather more
than offset a shifting of customers from sales to transportation service.
Gas distribution margin, defined as operating revenues less cost of gas and
revenue taxes, for the periods ended September 30 was as follows:
Three months Nine months Twelve months
1994 1993 1994 1993 1994 1993
Gas distribution margin
(millions) $ 64.6 $ 64.1 $313.0 $300.7 $442.7 $429.4
Margin per Mcf delivered 1.11 1.12 .87 .90 .86 .88
NICOR Inc. Page 10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Gas distribution margin increased $12.3 million and $13.3 million in the
nine- and twelve-month periods, respectively. Higher deliveries resulting
from the positive impact of colder weather and increased deliveries to an
electric generating facility benefited both periods. Margin per Mcf
delivered decreased in each period due to additional lower-margin deliveries
resulting from the commencement of deliveries in May 1993 to the electric
generating facility. For the three-, nine- and twelve-month periods,
deliveries to the facility increased 3.3 Bcf, 15.9 Bcf and 19.8 Bcf,
respectively.
Operating and maintenance expense rose for each period as a result of
increases in both segments. In the gas distribution segment, expense
comparisons for each period were negatively impacted by higher
administrative and general expense. In the shipping segment, the increase
in each period was due primarily to higher shore and vessel costs along with
increased administrative and general expense.
Depreciation expense increased in each period primarily as a result of plant
additions in the gas distribution segment.
Other income decreased for the three-month period due primarily to the
impact of higher interest on income tax adjustments. For the twelve-month
period, the increase was due primarily to the 1992 writedown of an equity
investment in the shipping segment.
Interest on debt decreased for the nine- and twelve-month periods due to
reduced borrowing levels and lower interest rates.
The effective income tax rate in the third quarter of 1994 decreased from
the corresponding 1993 period due primarily to the retroactive increase in
the federal income tax rate which was recognized in the third quarter of
1993. The third quarter 1994 effective income tax rate was unusually low
due to adjustments related to prior interim periods.
FINANCIAL CONDITION
Net cash flow from continuing operations for the nine- and twelve-month
periods increased $32.1 million and $67.2 million, respectively, due to the
timing of the recovery of gas costs from customers in the gas distribution
segment. Net cash flow from operations may fluctuate widely from one
interim period to another due to the seasonal nature of NICOR's businesses.
The company generally relies on short-term financing to meet temporary
working capital needs.
NICOR and its gas distribution subsidiary maintain short-term credit
agreements with major domestic and foreign banks, which serve as backup for
the issuance of commercial paper. At September 30, 1994, these agreements
totaled $360 million, and the company had $130.7 million in commercial paper
outstanding. On August 1, 1994, the company replaced its long-term credit
agreement with short-term credit agreements.
NICOR Inc. Page 11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
Northern Illinois Gas filed a $225 million First Mortgage Bond shelf
registration statement with the Securities and Exchange Commission in April
1994. The net proceeds from any securities issued are expected to be used
for the refinancing of certain outstanding First Mortgage Bonds, for
construction programs to the extent not provided by internally generated
funds, and for general corporate purposes.
In July 1994, Northern Illinois Gas redeemed $50 million of 8.70% First
Mortgage Bonds due in 1995 with proceeds from the issuance of $50 million of
5-1/2% unsecured Notes due in July 1995.
In August 1994, Northern Illinois Gas issued $50 million of 8-1/4% First
Mortgage Bonds due in 2024. The net proceeds from the sale of the bonds are
being used for general corporate purposes, including construction programs.
On May 1, 1994 the company redeemed its 7.90% preference stock at a price of
$505 per share.
In July 1994, the company completed the $100 million common stock buy-back
program initiated in 1993. During 1994, NICOR purchased and retired 1.8
million common shares at an aggregate cost of $47.9 million.
In September 1994, NICOR announced another stock repurchase program having
an aggregate market value of up to $50 million. The purchases, which began
in October 1994, are being made as market conditions permit through open
market transactions.
Effective with the dividend paid on May 1, 1994 NICOR's quarterly dividend
on common stock was increased 3.3 percent to 31.5 cents per share.
OTHER MATTERS
In March 1994, the Ill.C.C. authorized Illinois local gas distribution
companies, including Northern Illinois Gas, to recover all prudently
incurred FERC Order 636 transition costs from their customers. The company
has been recovering such costs through its Uniform Purchased Gas Adjustment
Clause. For further information, see page 5, Regulatory Matters.
The FERC has denied NICOR Exploration Company's request for rehearing in the
matter of NGPA Section 108 prices. NICOR Exploration Company has filed its
appeal of the matter with the Fifth Circuit Court of Appeals. For further
information, see page 6, Contingencies.
In January 1994, Northern Illinois Gas began recovery of gas manufacturing
plant cleanup costs from its customers in accordance with an Ill.C.C.-
approved cost recovery plan. In April 1994, the Illinois Supreme Court
agreed to hear an appeal filed by a consumer group. The consumer group
argues that no cleanup costs should be recoverable from ratepayers.
Northern Illinois Gas and other utilities argue that they should be entitled
to recover capital costs in addition to cleanup costs. For further
information, see page 6, Contingencies.
Although unable to determine the outcome of these matters, management
believes that appropriate accruals have been recorded. Final disposition of
these matters is not expected to have a material impact on the company's
financial condition or results of operations.
<TABLE>
NICOR Inc. Page 12
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
OPERATING STATISTICS
Gas Distribution
Changes in weather can have a material effect on operating results; selected weather statistics are in the
table below. Operating revenues, deliveries and other data are as follows:
<CAPTION>
Three months ended Nine months ended Twelve months ended
September 30 September 30 September 30
1994 1993 1994 1993 1994 1993
Operating revenues (millions):
Sales
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Residential $ 80.5 $ 94.4 $ 707.1 $ 656.6 $1,039.7 $ 995.7
Commercial 19.0 25.3 197.8 197.4 292.5 308.0
Industrial 2.7 4.6 40.2 38.9 56.7 60.6
102.2 124.3 945.1 892.9 1,388.9 1,364.3
Transportation
Commercial 5.9 5.2 30.0 26.5 42.3 40.7
Industrial 10.6 10.2 37.8 34.5 51.4 52.3
16.5 15.4 67.8 61.0 93.7 93.0
Revenue taxes and other 10.5 10.6 90.8 80.3 120.2 109.3
$ 129.2 $ 150.3 $1,103.7 $1,034.2 $1,602.8 $1,566.6
Deliveries (Bcf):
Sales
Residential 14.9 16.0 153.7 148.6 227.8 223.9
Commercial 3.8 4.7 43.7 45.8 64.8 70.9
Industrial .6 1.1 9.5 9.9 13.4 15.1
19.3 21.8 206.9 204.3 306.0 309.9
Transportation
Commercial 6.0 5.4 38.1 33.3 54.8 48.7
Industrial 32.6 29.8 113.4 94.8 154.0 128.4
38.6 35.2 151.5 128.1 208.8 177.1
57.9 57.0 358.4 332.4 514.8 487.0
Gas cost per Mcf sold $ 2.80 $ 3.41 $ 3.39 $ 3.18 $ 3.40 $ 3.27
Weather statistics:
Degree days 66 146 4,082 3,962 6,292 6,083
Percent colder (warmer) than normal 8 139 3 - 2 (2)
Customers at end of period (thousands):
Residential 1,610.3 1,580.8
Commercial 153.4 151.4
Industrial 13.6 13.5
1,777.3 1,745.7
</TABLE>
<TABLE>
NICOR Inc. Page 13
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Concluded)
OPERATING STATISTICS (Concluded)
<CAPTION>
Three months ended Nine months ended Twelve months ended
September 30 September 30 September 30
1994 1993 1994 1993 1994 1993
Shipping
<S> <C> <C> <C> <C> <C> <C>
Operating revenues (millions) $ 36.5 $ 35.2 $ 109.6 $ 102.0 $ 148.2 $ 136.3
Operating income (millions) $ 3.7 $ 3.5 $ 11.5 $ 9.9 $ 17.1 $ 13.8
TEUs shipped (thousands)
Southbound 17.9 19.0 53.8 55.4 73.7 74.0
Northbound 3.8 4.3 12.6 11.9 16.8 15.2
Interisland 1.3 .6 3.0 1.8 3.5 2.4
23.0 23.9 69.4 69.1 94.0 91.6
Revenue per TEU $ 1,503 $ 1,428 $ 1,516 $ 1,450 $ 1,517 $ 1,468
Ports served (at September 30) 22 22
Vessels owned (at September 30) 14 14
</TABLE>
NICOR Inc. Page 14
PART II - Other Information
Item 1. Legal Proceedings
For information concerning legal proceedings, see Contingencies in
Notes to Consolidated Financial Statements on page 6, which is
incorporated herein by reference.
Item 6. Exhibits and Reports on Form 8-K
(a) See Exhibit Index on page 16 filed herewith.
(b) The company did not file a report on Form 8-K during the third
quarter of 1994.
NICOR Inc. Page 15
Signature
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.
NICOR Inc.
Date November 9, 1994 By DAVID L. CYRANOSKI
David L. Cyranoski
Vice President, Secretary
and Controller
NICOR Inc. Page 16
Exhibit Index
Exhibit
Number Description of Document
3.01 * Amendments to Articles of Incorporation of the company. (Proxy
Statement dated March 9, 1994, NICOR Inc., Exhibit A-1 and
Exhibit B thereto.)
4.01 * Supplemental Indenture, dated August 15, 1994 of Northern Illinois
Gas Company to Continental Bank, Trustee, under Indenture dated as
of January 1, 1954. (File No. 1-7296, Form 10-Q for Third Quarter
of 1994, Northern Illinois Gas Company, Exhibit 4.01.)
27.01 Financial Data Schedule.
* These exhibits have been previously filed with the Securities and Exchange
Commission and are incorporated herein as exhibits by reference. The file
numbers and exhibit numbers are stated in parentheses in the description
of such exhibits.
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF INCOME, THE CONSOLIDATED BALANCE SHEET AND THE
CONSOLIDATED STATEMENT OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1993
<PERIOD-END> SEP-30-1994
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1575
<OTHER-PROPERTY-AND-INVEST> 121
<TOTAL-CURRENT-ASSETS> 296
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 67
<TOTAL-ASSETS> 2059
<COMMON> 130
<CAPITAL-SURPLUS-PAID-IN> 91
<RETAINED-EARNINGS> 459
<TOTAL-COMMON-STOCKHOLDERS-EQ> 680
9
0
<LONG-TERM-DEBT-NET> 446
<SHORT-TERM-NOTES> 3
<LONG-TERM-NOTES-PAYABLE> 13
<COMMERCIAL-PAPER-OBLIGATIONS> 131
<LONG-TERM-DEBT-CURRENT-PORT> 50
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 727
<TOT-CAPITALIZATION-AND-LIAB> 2059
<GROSS-OPERATING-REVENUE> 1214
<INCOME-TAX-EXPENSE> 35
<OTHER-OPERATING-EXPENSES> 1080
<TOTAL-OPERATING-EXPENSES> 1115
<OPERATING-INCOME-LOSS> 99
<OTHER-INCOME-NET> 4
<INCOME-BEFORE-INTEREST-EXPEN> 103
<TOTAL-INTEREST-EXPENSE> 28
<NET-INCOME> 75
1
<EARNINGS-AVAILABLE-FOR-COMM> 74
<COMMON-STOCK-DIVIDENDS> 50
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 311
<EPS-PRIMARY> 1.40
<EPS-DILUTED> 1.40
</TABLE>
