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 June 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 July 31, 1994, were
52,176,994.
NICOR Inc. Page i
Table of Contents
Page
Part I. Financial Information
Item 1. Financial Statements (Unaudited) 1
Consolidated Statement of Income -
Three, Six and Twelve Months Ended
June 30, 1994 and 1993 2
Consolidated Statement of Cash Flows -
Six and Twelve Months Ended
June 30, 1994 and 1993 3
Consolidated Balance Sheet -
June 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 4. Submission of Matters to a Vote of
Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 15
Signature 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 Six months ended Twelve months ended
June 30 June 30 June 30
1994 1993 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Operating revenues $ 267.6 $ 278.1 $1,047.8 $ 950.7 $1,771.0 $ 1,688.9
Operating expenses
Cost of gas 129.8 142.1 657.4 585.1 1,079.4 1,033.7
Operating and maintenance 67.1 62.8 135.4 124.7 266.9 242.5
Depreciation 18.0 16.9 58.5 53.6 101.3 96.0
Taxes, other than income taxes 21.8 22.3 80.5 73.4 123.2 117.4
236.7 244.1 931.8 836.8 1,570.8 1,489.6
Operating income 30.9 34.0 116.0 113.9 200.2 199.3
Other income (expense)
Interest income .6 .7 1.2 1.1 2.0 2.1
Other, net 1.1 .1 1.9 (.1) 7.0 (6.0)
1.7 .8 3.1 1.0 9.0 (3.9)
Income before interest on debt
and income taxes 32.6 34.8 119.1 114.9 209.2 195.4
Interest on debt, net of
amounts capitalized 8.8 10.0 18.8 21.5 38.6 44.5
Income before income taxes 23.8 24.8 100.3 93.4 170.6 150.9
Income taxes 7.9 8.1 33.1 30.3 57.0 47.5
Income from continuing operations 15.9 16.7 67.2 63.1 113.6 103.4
Discontinued operations, net
of income taxes
Income from operations - - - 2.3 - 8.2
Gain on disposal, net - - - - - 4.7
- - - 2.3 - 12.9
Net income 15.9 16.7 67.2 65.4 113.6 116.3
Dividends on preferred and
preference stock .1 .3 .4 .5 .9 1.1
Earnings applicable to
common stock $ 15.8 $ 16.4 $ 66.8 $ 64.9 $ 112.7 $ 115.2
Average shares of common
stock outstanding 52.7 55.7 53.2 55.7 53.9 55.7
Earnings per average share
of common stock
Continuing operations $ .30 $ .29 $ 1.26 $ 1.12 $ 2.09 $ 1.84
Discontinued operations - - - .04 - .23
$ .30 $ .29 $ 1.26 $ 1.16 $ 2.09 $ 2.07
Dividends declared per share
of common stock $ .315 $ .305 $ .63 $ .61 $ 1.24 $ 1.20
<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>
Six months ended Twelve months ended
June 30 June 30
1994 1993 1994 1993
Operating activities
<S> <C> <C> <C> <C>
Net income $ 67.2 $ 65.4 $ 113.6 $ 116.3
Less income from discontinued operations - 2.3 - 12.9
Income from continuing operations 67.2 63.1 113.6 103.4
Adjustments to reconcile income from continuing operations
to net cash flow provided from continuing operations:
Depreciation 58.5 53.6 101.3 96.0
Deferred income tax expense (benefit) (19.2) (12.4) (20.8) (22.6)
106.5 104.3 194.1 176.8
Change in working capital items and other:
Receivables, less allowances 157.3 171.8 (2.1) (28.6)
Gas in storage 75.2 99.1 (.9) 2.8
Deferred/accrued gas costs 49.8 (21.8) 57.1 (53.6)
Accounts payable (25.2) (45.6) 33.4 1.0
Accrued taxes 1.1 (21.0) 18.9 (16.7)
Temporary LIFO liquidation 50.1 57.3 (7.2) 50.0
Other (.3) 4.0 (5.0) 9.8
Net cash flow provided from continuing operations 414.5 348.1 288.3 141.5
Net cash flow provided from (used for) discontinued operations 1.3 22.3 (33.3) 34.4
Net cash flow provided from operating activities 415.8 370.4 255.0 175.9
Investing activities
Capital expenditures (58.7) (57.0) (143.3) (149.5)
Short- and long-term investments 19.9 (4.5) 7.1 (13.2)
Proceeds from sales of discontinued operations - 135.0 4.9 160.1
Other investing activities of discontinued operations - (6.2) .7 (14.3)
Other - .5 1.2 4.9
Net cash flow provided from (used for) investing activities (38.8) 67.8 (129.4) (12.0)
Financing activities
Net proceeds from issuing long-term debt - 173.7 61.5 247.8
Disbursements to retire long-term debt - (183.7) (78.8) (244.9)
Short-term borrowings (repayments), net (292.5) (328.0) (3.5) (35.0)
Dividends paid (33.8) (34.0) (67.9) (67.4)
Disbursements to reacquire stock (54.0) (18.4) (95.6) (21.8)
Other .2 5.8 1.8 7.0
Net cash flow used for financing activities (380.1) (384.6) (182.5) (114.3)
Net increase (decrease) in cash and cash equivalents (3.1) 53.6 (56.9) 49.6
Cash and cash equivalents, beginning of period 10.5 10.7 64.3 14.7
Cash and cash equivalents, end of period $ 7.4 $ 64.3 $ 7.4 $ 64.3
<F1>
The accompanying notes are an integral part of this statement.
</TABLE>
<TABLE>
NICOR Inc. Page 4
Consolidated Balance Sheet (Unaudited)
(Millions)
<CAPTION>
June 30, December 31, June 30,
Assets 1994 1993 1993
Current assets
<S> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents $ 7.4 $ 10.5 $ 64.3
Short-term investments, at cost which approximates market 31.7 51.6 39.5
Receivables, less allowances of $8.5, $6.8 and $8.2, respectively 119.9 277.2 117.8
Gas in storage, at last-in, first-out (LIFO) cost 22.6 97.8 21.7
Deferred gas costs 7.1 56.9 64.2
Other 14.6 15.0 14.8
203.3 509.0 322.3
Investments and other 62.3 56.9 54.4
Property, plant and equipment, at cost
Gas distribution 2,631.0 2,664.1 2,603.3
Shipping 221.9 219.8 218.9
Other .2 .2 .1
2,853.1 2,884.1 2,822.3
Less accumulated depreciation 1,199.5 1,227.9 1,200.8
1,653.6 1,656.2 1,621.5
$ 1,919.2 $ 2,222.1 $ 1,998.2
Liabilities and Capitalization
Current liabilities
Long-term obligations due within one year $ .2 $ .3 $ .4
Short-term borrowings 11.5 304.0 15.0
Accounts payable 202.4 229.0 176.3
Temporary LIFO liquidation 50.1 - 57.3
Accrued taxes 11.2 10.1 22.1
Other 34.8 40.9 37.8
310.2 584.3 308.9
Deferred credits and other liabilities
Deferred income taxes 164.1 168.2 161.6
Regulatory income tax liability 93.6 95.5 102.3
Unamortized investment tax credits 54.9 55.9 57.1
Other 136.5 138.7 145.7
449.1 458.3 466.7
Capitalization
Long-term debt 459.2 458.9 475.3
Preferred and preference stock
Redeemable 9.3 16.6 16.6
Nonredeemable .1 .1 .1
Common equity
Common stock 130.7 134.9 138.5
Paid-in capital 92.5 134.5 170.3
Retained earnings (since December 31, 1985) 468.1 434.5 421.8
1,159.9 1,179.5 1,222.6
$ 1,919.2 $ 2,222.1 $ 1,998.2
<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.
Gas in Storage. Gas in storage injections and withdrawals are valued using
the last-in, first-out (LIFO) method on a calendar-year basis. For interim
periods, the difference between current replacement cost and the LIFO cost
for quantities of gas temporarily withdrawn from storage is recorded in cost
of gas as a temporary LIFO liquidation.
CASH FLOW INFORMATION
Income taxes paid, net of refunds, and interest paid, net of amounts
capitalized, for the periods ended June 30 were (millions):
Six months Twelve months
1994 1993 1994 1993
Income taxes paid $44.9 $39.6 $76.8 $71.6
Interest paid 19.1 22.8 40.7 45.4
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 reformation and certain other costs, caused by compliance with Order
636. Virtually all of these costs are expected to be 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.
On March 9, 1994 the Ill.C.C. entered an order authorizing Illinois local
gas distribution companies, including Northern Illinois Gas, to recover
prudently incurred transition costs from sales customers and transportation
customers with firm standby service. On May 4, 1994 the Ill.C.C. voted to
reopen hearings regarding the order, limiting the rehearing to an evaluation
of the proper method of cost recovery. The company believes that the
changes required by Order 636 will not have a material impact on the
company's financial condition or results of operations. Appropriate
accruals for transition costs incurred through June 30, 1994 have been
recorded.
NICOR Inc. Page 6
Notes To Consolidated Financial Statements (Unaudited)
(Continued)
SHORT- AND LONG-TERM DEBT
In July 1994, Northern Illinois Gas redeemed the 8.70% First Mortgage Bonds
which were due in 1995 with proceeds from the issuance of $50 million of
5-1/2% unsecured Notes due in July 1995.
On August 1, 1994 the company replaced its $50 million long-term credit
agreement with short-term credit agreements.
REDEEMABLE PREFERENCE STOCK
On May 1, 1994 the company redeemed its 7.90% 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 June 30, 1994 could approximate $10 million. The
potential additional cost after June 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.
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. Based upon a preliminary review of the 28
properties, the company is prioritizing the sites for further testing and
analysis, and plans to test the higher-risk owned sites first to determine
the extent of any remediation necessary.
NICOR Inc. Page 7
Notes To Consolidated Financial Statements (Unaudited)
(Concluded)
CONTINGENCIES (Concluded)
Northern Illinois Gas understands that four of the sites contain residues
and waste materials that do not meet some current environmental
specifications. Two of these sites are owned and two were formerly owned or
leased by Northern Illinois Gas. Additional testing and analysis began at
the first of these sites in August 1994.
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 and 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
which 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 are recoverable from ratepayers. Northern Illinois Gas and other
utilities argue that they are 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 June 30, 1993 were (in millions):
Six months Twelve months
Operating revenues $15.9 $51.5
Income before income taxes $ 3.5 $12.8
Income taxes 1.2 4.6
Income from discontinued operations $ 2.3 $ 8.2
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 second quarter 1994 net income was $15.9 million, down from $16.7
million in 1993. Earnings per common share were $.30, compared with $.29 in
the year ago quarter. The decrease in net income was due to lower operating
results at both segments, partially offset by lower interest expense and
improvements in nonoperating income. Earnings per share were positively
affected by a common stock buy-back program, which reduced average shares
outstanding by about 5 percent.
Net income from continuing operations for the six months ended June 30, 1994
increased to $67.2 million from $63.1 million in 1993. Earnings per common
share from continuing operations were $1.26, up from $1.12 a year ago.
Lower interest expense and higher nonoperating income contributed to the
increase. In addition, operating income rose to $116 million from $113.9
million in the prior period reflecting improvements at both NICOR
businesses. Per share results 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 six-month 1993
earnings per common share were $1.16 and net income was $65.4 million.
Net income from continuing operations for the twelve months ended June 30,
1994 rose to $113.6 million from $103.4 million a year ago. Earnings per
common share from continuing operations were $2.09 compared with $1.84 a
year ago. The increase was due to an improvement in nonoperating income,
lower interest expense and stronger operating results in the shipping
segment that more than offset the increase in the federal income tax rate.
Per share results also benefited from the company's common stock buy-back
program. Including discontinued operations, net income for the twelve months
ended June 30, 1993 totalled $116.3 million and earnings per common share
were $2.07.
Operating income (loss) for the periods ended June 30 by business segment
was (millions):
Three months Six months Twelve months
1994 1993 1994 1993 1994 1993
Gas distribution $ 28.6 $ 31.4 $110.3 $109.7 $188.2 $189.7
Shipping 3.4 3.6 7.8 6.3 16.9 13.4
Other (1.1) (1.0) (2.1) (2.1) (4.9) (3.8)
$ 30.9 $ 34.0 $116.0 $113.9 $200.2 $199.3
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 declined $2.8 million to $28.6
million for the second quarter as increased operating expenses and
higher depreciation more than offset a modest improvement in margin.
For the six-month period, operating income increased to $110.3
million from $109.7 million a year ago. The improvement reflects
increased deliveries partially offset by higher operating expenses.
Operating income for the twelve-month period decreased $1.5 million
to $188.2 million as higher operating expenses more than offset the
positive impact of colder weather.
- - Shipping operating income for the second quarter was essentially
unchanged. For the six-month period, operating income increased to
$7.8 million, up from $6.3 million in 1993, as increased revenues
primarily related to higher prices and increased shipping volumes
more than offset increased operating expenses. For the twelve-month
period, operating income increased $3.5 million to $16.9 million as
higher revenues, primarily attributable to the impact of increased
volumes, more than offset increased operating expenses.
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 $10.5 million in the second quarter to $267.6
million due to the effect of 10 percent warmer weather in the gas
distribution segment. For the six- and twelve-month periods, operating
revenues increased $97.1 million to $1,047.8 million and $82.1 million to
$1,771 million, respectively, due primarily to higher revenues in the gas
distribution segment resulting from the recovery from customers of higher
gas costs and the positive impact of colder weather.
Gas distribution margin, defined as operating revenues less cost of gas and
revenue taxes, for the periods ended June 30 was as follows:
Three months Six months Twelve months
1994 1993 1994 1993 1994 1993
Gas distribution margin
(millions) $ 83.8 $ 83.2 $248.5 $236.6 $442.2 $427.3
Margin per Mcf delivered 1.01 1.08 .83 .86 .86 .89
Gas distribution margin increased $11.9 million and $14.9 million for the
six- and twelve-month periods, respectively, due mainly to higher
deliveries, related primarily to the positive impact of colder weather.
Margin per Mcf delivered decreased in each period due to additional lower-
margin deliveries resulting from the commencement of deliveries in May 1993
to an electric generating facility. For the three-, six- and twelve-month
periods, deliveries to the facility increased 7.8 Bcf, 12.6 Bcf and
18.9 Bcf, respectively.
NICOR Inc. Page 10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Operating and maintenance expense rose for each period as a result of
increases in both segments. In the gas distribution segment, expense
comparisons were negatively impacted by higher administrative and general
expense. A higher bad debt provision associated with increased revenues
also contributed to the increase for the six- and twelve-month periods. In
the shipping segment, the increase was due primarily to higher U.S. shore
and vessel costs. An increase in outport shore costs also contributed to
the six- and twelve-month periods.
Depreciation expense increased in each period primarily as a result of plant
additions in the gas distribution segment.
Other income increased for the three- and six-month periods due primarily to
the impact of lower interest on income tax adjustments. For the twelve-
month period, the increase was due to the 1992 writedown of an equity
investment in the shipping segment and the impact of lower interest on
income tax adjustments.
Interest on debt decreased in all periods due primarily to the impact of
reduced borrowing levels and lower interest rates.
The effective income tax rate rose in each period mainly as a result of an
increase in the federal income tax rate.
FINANCIAL CONDITION
Net cash flow from continuing operations for the six- and twelve-month
periods increased $66.4 million and $146.8 million, respectively, due
primarily 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 credit agreements with
major domestic and foreign banks which serve as backup for the issuance of
commercial paper. At June 30, 1994, these short- and long-term credit
agreements totaled $350 million and $50 million, respectively, and there was
$9 million in commercial paper outstanding. On August 1, 1994 the company
replaced its long-term credit agreement with short-term credit agreements.
Northern Illinois Gas filed a $225 million First Mortgage Bond shelf
registration statement with the Securities and Exchange Commission in April
1994. In addition, $50 million of First Mortgage Bonds remain unsold under
a previously filed shelf registration statement. 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 1994, depending upon market conditions, the company intends to
issue $50 million of First Mortgage Bonds.
NICOR Inc. Page 11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
In July 1994, Northern Illinois Gas redeemed the 8.70% First Mortgage Bonds
which were due in 1995 with proceeds from the issuance of $50 million of
5-1/2% unsecured Notes due in July 1995.
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.
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.
Effective May 1, 1993 NICOR's quarterly dividend on common stock was
increased to 30.5 cents from 29.5 cents.
OTHER MATTERS
On March 9, 1994 the Ill.C.C. entered an order authorizing Illinois local
gas distribution companies, including Northern Illinois Gas, to recover
prudently incurred FERC Order 636 transition costs from sales customers and
transportation customers with firm standby service. On May 4, 1994 the
Ill.C.C. voted to reopen hearings regarding the order, limiting the
rehearing to an evaluation of the proper method of cost recovery. 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 are recoverable from ratepayers. Northern
Illinois Gas and other utilities argue that they are 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 Six months ended Twelve months ended
June 30 June 30 June 30
1994 1993 1994 1993 1994 1993
Operating revenues (millions):
Sales
<S> <C> <C> <C> <C> <C> <C>
Residential $ 148.3 $ 154.1 $ 626.6 $ 562.2 $1,053.5 $ 984.9
Commercial 36.2 43.2 178.8 172.1 298.9 307.7
Industrial 6.4 7.8 37.5 34.3 58.6 60.4
190.9 205.1 842.9 768.6 1,411.0 1,353.0
Transportation
Commercial 7.3 6.7 24.0 21.2 41.6 41.5
Industrial 11.0 10.6 27.2 24.4 50.9 55.8
18.3 17.3 51.2 45.6 92.5 97.3
Revenue taxes and other 22.1 21.2 80.3 69.7 120.4 107.7
$ 231.3 $ 243.6 $ 974.4 $ 883.9 $1,623.9 $1,558.0
Deliveries (Bcf):
Sales
Residential 28.9 30.9 138.8 132.6 228.9 223.8
Commercial 7.2 9.1 39.9 41.1 65.8 71.5
Industrial 1.4 1.8 8.9 8.8 13.8 15.1
37.5 41.8 187.6 182.5 308.5 310.4
Transportation
Commercial 8.3 7.5 32.1 27.9 54.1 48.5
Industrial 36.8 27.6 80.8 65.0 151.3 122.9
45.1 35.1 112.9 92.9 205.4 171.4
82.6 76.9 300.5 275.4 513.9 481.8
Gas cost per Mcf sold $ 3.39 $ 3.33 $ 3.45 $ 3.16 $ 3.44 $ 3.23
Weather statistics:
Degree days 629 696 4,016 3,816 6,372 6,031
Percent colder (warmer) than normal (9) 1 3 (2) 3 (2)
Customers at end of period (thousands):
Residential 1,608.0 1,578.8
Commercial 154.6 152.9
Industrial 13.7 13.6
1,776.3 1,745.3
</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 Six months ended Twelve months ended
June 30 June 30 June 30
1994 1993 1994 1993 1994 1993
Shipping
<S> <C> <C> <C> <C> <C> <C>
Operating revenues (millions) $ 36.1 $ 34.5 $ 73.1 $ 66.8 $ 146.8 $ 130.9
Operating income (millions) $ 3.4 $ 3.6 $ 7.8 $ 6.3 $ 16.9 $ 13.4
TEUs shipped (thousands)
Southbound 18.0 19.1 35.9 36.4 74.8 71.2
Northbound 4.2 4.0 8.8 7.6 17.4 14.2
Interisland 1.1 .6 1.7 1.2 2.8 2.4
23.3 23.7 46.4 45.2 95.0 87.8
Revenue per TEU $ 1,492 $ 1,437 $ 1,523 $ 1,461 $ 1,498 $ 1,482
Ports served (at June 30) 23 22
Vessels owned (at June 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 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders of the company was held on April
21, 1994 for the purpose of electing the Board of Directors,
approving the appointment of independent auditors and voting on the
proposals described below. Proxies for the meeting were solicited
pursuant to Section 14(a) of the Securities Exchange Act of 1934
and there was no solicitation in opposition to management's
solicitations. The results of the voting as reported below are as
of the record date for shares eligible to vote, February 22, 1994.
There were no "broker non-votes."
All of management's nominees for directors as listed in the proxy
statement were elected as indicated below:
Shares Shares
Voted Voted
NOMINEE FOR WITHHELD
Robert M. Beavers, Jr. 45,697,250 319,076
John H. Birdsall, III 45,734,607 307,181
W. H. Clark 45,608,246 354,963
Richard G. Cline 45,662,281 356,059
Thomas L. Fisher 45,750,279 292,813
John E. Jones 45,608,246 354,617
Dennis J. Keller 45,640,683 334,524
Charles S. Locke 45,556,678 384,504
Sidney R. Petersen 45,688,026 318,085
Daniel R. Toll 45,639,228 351,723
Patricia A. Weir 45,615,550 348,834
The proposal to ratify the appointment by the Board of Directors of
the firm of Arthur Andersen & Co. as independent auditors of the
company was approved by the following vote:
Shares Shares Shares
Voted Voted Voted
FOR AGAINST ABSTAINING
44,935,217 650,224 368,229
The proposal to amend Article Ten of the company's Articles of
Incorporation to permit the discretionary indemnification of
certain agents of the company, which is now mandatory; to make
NICOR Inc. Page 15
PART II - Other Information (Concluded)
Item 4. Submission of Matters to a Vote of Security Holders (Concluded)
mandatory the advancement of expenses for certain litigation
involving directors, officers or employees, which is now
discretionary; and otherwise conform it to current law was approved
by the following vote:
Shares Shares Shares
Voted Voted Voted
FOR AGAINST ABSTAINING
42,095,813 2,742,317 1,083,809
The proposal to adopt Article Fifteen to limit the personal
liability of the company's Directors for monetary damages in
certain circumstances arising from breach of fiduciary duty to the
company or its stockholders was approved by the following vote:
Shares Shares Shares
Voted Voted Voted
FOR AGAINST ABSTAINING
40,921,878 4,017,124 982,937
Item 6. Exhibits and Reports on Form 8-K
(a) No exhibits are required to be filed.
(b) The company did not file a report on Form 8-K during the second
quarter of 1994.
NICOR Inc. Page 16
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 August 10, 1994 By DAVID L. CYRANOSKI
David L. Cyranoski
Vice President, Secretary
and Controller
