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 March 31, 1997
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)
(630) 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 April 30, 1997, were
48,911,320.
NICOR Inc. Page i
Table of Contents
Page
Part I. Financial Information
Item 1. Financial Statements (Unaudited) 1
Consolidated Statement of Income -
Three and Twelve Months Ended
March 31, 1997 and 1996 2
Consolidated Statement of Cash Flows -
Three and Twelve Months Ended
March 31, 1997 and 1996 3
Consolidated Balance Sheet -
March 31, 1997 and 1996, and
December 31, 1996 4
Notes to the Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7
Part II. Other Information
Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 12
Signature 13
Exhibit Index 14
Selected terms:
Ill.C.C. - Illinois Commerce Commission.
Mcf, Bcf - Thousand cubic feet, billion cubic feet.
TEU - Twenty-foot equivalent unit.
Degree days - The extent to which the daily average
temperature falls below 65 degrees
Fahrenheit.
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 Twelve months ended
March 31 March 31
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Operating revenues $ 900.0 $ 700.9 $2,049.8 $ 1,571.2
Operating expenses
Cost of gas 632.9 439.4 1,236.6 851.5
Operating and maintenance 80.8 77.5 331.6 296.3
Depreciation 52.2 49.4 128.1 116.4
Taxes, other than income taxes 60.9 52.5 129.2 109.1
826.8 618.8 1,825.5 1,373.3
Operating income 73.2 82.1 224.3 197.9
Other income (expense)
Interest income .4 .5 1.6 3.0
Other, net 1.7 (.2) 3.7 2.8
2.1 .3 5.3 5.8
Income before interest on debt
and income taxes 75.3 82.4 229.6 203.7
Interest on debt, net of amounts capitalized 13.2 11.7 49.3 42.0
Income before income taxes 62.1 70.7 180.3 161.7
Income taxes 21.7 25.2 64.2 57.2
Income from continuing operations 40.4 45.5 116.1 104.5
Income from discontinued operations,
net of income taxes - - 15.0 -
Net income 40.4 45.5 131.1 104.5
Dividends on preferred stock - .1 .4 .4
Earnings applicable to common stock $ 40.4 $ 45.4 $ 130.7 $ 104.1
Average shares of common stock outstanding 49.3 50.2 49.8 50.4
Earnings per average share of common stock
Continuing operations $ .82 $ .90 $ 2.33 $ 2.06
Discontinued operations - - .30 -
$ .82 $ .90 $ 2.63 $ 2.06
Dividends declared per share
of common stock $ .35 $ .33 $ 1.34 $ 1.29
<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>
Three months ended Twelve months ended
March 31 March 31
1997 1996 1997 1996
Operating activities
<S> <C> <C> <C> <C>
Net income $ 40.4 $ 45.5 $ 131.1 $ 104.5
Adjustments to reconcile net income to net cash flow
provided from operating activities:
Depreciation 52.2 49.4 128.1 116.4
Deferred income tax expense (benefit) (2.9) (10.4) 6.1 (3.9)
Change in working capital items and other:
Receivables, less allowances (52.1) (46.3) (84.1) (85.1)
Gas in storage 109.6 54.2 .2 (5.8)
Deferred/accrued gas costs 123.3 (63.7) 144.6 (112.0)
Accounts payable (136.4) 5.9 (116.8) 123.3
Accrued taxes 12.8 42.1 (27.4) 7.9
Temporary LIFO liquidation 95.0 96.7 (1.7) 16.0
Other 13.3 (11.3) 17.6 (29.7)
Net cash flow provided from operating activities 255.2 162.1 197.7 131.6
Investing activities
Capital expenditures (20.0) (19.5) (120.4) (148.8)
Short-term investments (7.4) (2.3) 1.8 (11.3)
Other (.5) (.3) .3 1.7
Net cash flow used for investing activities (27.9) (22.1) (118.3) (158.4)
Financing activities
Net proceeds from issuing long-term debt - - 74.2 72.0
Disbursements to retire long-term debt (25.0) (50.0) (25.0) (112.5)
Short-term borrowings (repayments), net (171.3) (71.2) (6.9) 110.6
Dividends paid (16.4) (16.2) (66.2) (65.1)
Disbursements to reacquire stock (14.4) (4.4) (45.7) (22.2)
Other (.2) - 5.7 1.6
Net cash flow used for financing activities (227.3) (141.8) (63.9) (15.6)
Net increase (decrease) in cash and cash equivalents - (1.8) 15.5 (42.4)
Cash and cash equivalents, beginning of period 20.5 6.8 5.0 47.4
Cash and cash equivalents, end of period $ 20.5 $ 5.0 $ 20.5 $ 5.0
Supplemental information
Income taxes paid, net of refunds $ 3.7 $ 1.7 $ 77.1 $ 53.1
Interest paid, net of amounts capitalized 20.6 18.2 48.7 41.0
<F1>
The accompanying notes are an integral part of this statement.
</TABLE>
<TABLE>
NICOR Inc. Page 4
Consolidated Balance Sheet (Unaudited)
(Millions)
<CAPTION>
March 31 December 31 March 31
Assets 1997 1996 1996
Current assets
<S> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents $ 20.5 $ 20.5 $ 5.0
Short-term investments, at cost which approximates market 20.1 12.7 21.9
Receivables, less allowances of $10.4, $7.7 and
$8.8, respectively 392.1 340.0 308.0
Gas in storage, at last-in, first-out (LIFO) cost 8.6 118.2 8.8
Deferred gas costs - 51.1 72.4
Other 18.3 30.9 28.4
459.6 573.4 444.5
Property, plant and equipment, at cost
Gas distribution 2,972.7 2,957.3 2,901.5
Shipping 234.5 233.9 224.3
Other 1.6 1.5 .5
3,208.8 3,192.7 3,126.3
Less accumulated depreciation 1,469.7 1,420.8 1,377.8
1,739.1 1,771.9 1,748.5
Other assets 95.0 93.3 88.3
$ 2,293.7 $ 2,438.6 $ 2,281.3
Liabilities and Capitalization
Current liabilities
Long-term obligations due within one year $ 25.0 $ 25.0 $ 25.0
Short-term borrowings 120.7 292.0 127.6
Accounts payable 197.5 333.9 314.3
Temporary LIFO liquidation 95.0 - 96.7
Accrued gas costs 72.2 - -
Accrued taxes 27.3 14.5 54.7
Other 33.7 34.4 39.2
571.4 699.8 657.5
Deferred credits and other liabilities
Deferred income taxes 213.9 211.6 172.5
Regulatory income tax liability 83.2 83.8 85.6
Unamortized investment tax credits 47.9 48.4 50.3
Other 138.1 139.9 150.6
483.1 483.7 459.0
Capitalization
Long-term debt 493.3 518.0 443.8
Preferred stock
Redeemable 7.4 7.4 8.8
Nonredeemable .1 .1 .1
Common equity
Common stock 122.7 123.7 125.4
Paid-in capital 10.4 23.8 45.6
Retained earnings 605.3 582.1 541.1
1,239.2 1,255.1 1,164.8
$ 2,293.7 $ 2,438.6 $ 2,281.3
<F1>
The accompanying notes are an integral part of this statement.
</TABLE>
NICOR Inc. Page 5
Notes to the 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. In April 1996, the gas
distribution composite depreciation rate was increased to 4.1 percent from
3.7 percent.
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.
NEW ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share. This statement simplifies the standards for
computing earnings per share (EPS) and makes them comparable to
international EPS standards. Statement No. 128 is effective for financial
statements issued for periods ending after December 15, 1997, and requires
restatement of all prior-period EPS data presented. This statement is not
expected to have a material impact on the company's EPS.
RATE PROCEEDING
On April 3, 1996, the Ill.C.C. granted Northern Illinois Gas a $33.7 million
general rate increase, of which $12 million relates to a change in the
company's composite depreciation rate. The new rate structure, effective
April 11, 1996, allows Northern Illinois Gas to recover a larger proportion
of its fixed costs during warmer months. An appeal by the company and other
parties, of certain issues contained in the Ill.C.C. Order, is currently
pending before the Third District Appellate Court of Illinois.
LONG-TERM DEBT
In February 1997, $25 million of 5-1/2% First Mortgage Bonds matured.
CONTINGENCIES
The company is involved in legal or administrative proceedings before
various courts and agencies with respect to rates, taxes and other matters.
Current environmental laws require treatment of certain waste materials on
sites owned by NICOR that may have been generated by barge-cleaning
facilities previously owned and operated by certain discontinued businesses
of the company. The cost of evaluation and cleanup is currently estimated
to range from $5 million to $15 million. The company is evaluating whether
any of these costs will be recoverable from insurance or other sources.
NICOR Inc. Page 6
Notes to the Consolidated Financial Statements (Unaudited)
(Concluded)
CONTINGENCIES (Concluded)
Until the early 1950s, certain manufactured gas facilities were operated in
the Northern Illinois Gas service territory. Manufactured gas is now known
to have created various by-products that may still be present at these
sites. Current environmental laws may require cleanup of these former
manufactured gas plant sites. The company has identified up to 40
properties in its service territory believed to be the location of such
sites. Of these properties, Northern Illinois Gas currently owns 15 and
formerly owned or leased 13. The remaining properties were never owned or
leased by the company. Information regarding preliminary reviews of the
company's currently owned and formerly owned or leased properties has been
presented to the Illinois Environmental Protection Agency. More detailed
investigations are either currently in progress or planned at many of these
sites. The results of continued testing and analysis should determine to
what extent remediation is necessary and may provide a basis for estimating
any additional future costs which, based on industry experience, could be
significant. Since 1994, the company has been recovering these costs from
its customers in accordance with Ill.C.C. authorization.
At certain sites, the current owners are seeking to allocate cleanup costs
to former owners or lessees, including Northern Illinois Gas.
On December 20, 1995, Northern Illinois Gas filed suit in the Circuit Court
of Cook County against insurance carriers seeking recovery of environmental
cleanup costs of certain former manufactured gas plant sites. Presently,
management cannot predict the outcome of this lawsuit. Any recoveries from
such litigation or other sources will be flowed back to the company's
customers.
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.
NICOR Inc. Page 7
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. 1996 Annual Report on
Form 10-K.
NICOR's first quarter 1997 net income was $40.4 million, compared with
$45.5 million in the first quarter of 1996, and earnings per common share
were $.82 compared with $.90 a year ago. The decrease was due primarily to
lower operating results in the gas distribution segment.
Income from continuing operations for the twelve months ended March 31 rose
to $116.1 million in 1997 from $104.5 million a year ago. Earnings per
common share from continuing operations were $2.33 compared with $2.06 a
year ago. The increase was primarily attributable to higher operating
results in the gas distribution segment. In the second quarter of 1996,
NICOR made a positive after-tax adjustment of $15 million to its reserve for
discontinued operations. Including this adjustment, NICOR's net income for
the twelve months ended March 31, 1997, was $131.1 million and earnings per
common share were $2.63.
Operating income (loss) for the periods ended March 31 by business segment
was (millions):
Three months Twelve months
1997 1996 1997 1996
Gas distribution $ 68.3 $ 75.9 $208.0 $178.0
Shipping 5.6 6.9 20.9 24.0
Other (.7) (.7) (4.6) (4.1)
$ 73.2 $ 82.1 $224.3 $197.9
The following summarizes operating income comparisons by business segment:
- - Gas distribution operating income decreased $7.6 million to
$68.3 million for the first quarter due mainly to the impact of rate
design changes resulting from last year's rate order and the impact
of weather that was warmer than the prior year. The rate design
changes, implemented in April 1996, shifted revenues from cold-
weather months to warm-weather months. For the twelve-month period,
operating income increased $30 million due primarily to the impact
of the 1996 rate order.
- - Shipping operating income for the three- and twelve-month periods
decreased $1.3 million and $3.1 million, respectively, as higher
operating costs more than offset increased operating revenues
relating to an increase in volumes shipped.
NICOR Inc. Page 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
RESULTS OF OPERATIONS
Details of various financial and operating information by segment can be
found in the tables on pages 10 and 11. The following summarizes the major
changes in NICOR's revenues and expenses.
Operating revenues increased $199.1 million to $900 million and
$478.6 million to $2,049.8 million for the three- and twelve-month periods,
respectively. For both periods, the increase was due primarily to higher
revenues in the gas distribution segment, resulting principally from
significantly higher natural gas supply costs, which are recovered from
customers.
Gas distribution margin, defined as operating revenues less cost of gas and
revenue taxes, which are both passed directly through to customers, is shown
in the following table for periods ended March 31. For the three-month
period, margin decreased due mainly to the impact of rate design changes
resulting from last year's rate order and the impact of weather that was
warmer than the prior year. For the twelve-month period, both margin and
margin per Mcf delivered increased due primarily to the impact of the
April 1996 rate order.
Three months Twelve months
1997 1996 1997 1996
Gas distribution margin
(Millions) $159.6 $168.8 $493.3 $456.4
Margin per Mcf delivered .74 .74 .91 .82
Operating and maintenance expense increased $3.3 million and $35.3 million
for the three- and twelve-month periods, respectively, due to higher costs
in the shipping segment caused primarily by increased volume-related shore
and vessel costs.
Depreciation expense increased in both periods due primarily to the change
in the gas distribution composite depreciation rate and gas plant additions.
For further information on the change in the composite depreciation rate,
see Accounting Policies on page 5.
Other income increased in the three-month period due primarily to a change
in interest on income tax adjustments.
Interest expense increased in both periods due primarily to higher borrowing
levels.
NICOR Inc. Page 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
FINANCIAL CONDITION
Net cash flow from operating activities increased $93.1 million and $66.1
million for the three- and twelve-month periods, respectively, due primarily
to the timing of gas cost recoveries in the gas distribution segment. Net
cash flow from operations may swing sharply 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 increases in working
capital needs.
NICOR and its gas distribution subsidiary maintain short-term credit
agreements with major domestic and foreign banks. At March 31, 1997, these
agreements, which serve as backup for the issuance of commercial paper,
totaled $303 million and the company had $120.7 million of commercial paper
outstanding. At March 31, 1997, the unused lines of credit under these
credit agreements were $182.3 million.
In February 1997, $25 million of 5-1/2% First Mortgage Bonds matured.
Under an existing common stock repurchase program, NICOR purchased and
retired 406,500 common shares during the first quarter of 1997 at an
aggregate cost of $14.1 million.
Effective with the dividend paid on May 1, 1997, NICOR's quarterly dividend
on common stock was increased 6.1 percent to 35 cents per share.
NEW ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share. This statement simplifies the standards for
computing earnings per share (EPS) and makes them comparable to international
EPS standards. This statement is not expected to have a material impact on
the company's EPS. For further information, see New Accounting Pronouncement
on page 5.
<TABLE>
NICOR Inc. Page 10
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
OPERATING STATISTICS
Gas Distribution
Changes in weather can materially affect operating results. Operating revenues, deliveries, weather
statistics and other data are presented below:
<CAPTION>
Three months ended Twelvemonths ended
March 31 March 31
1997 1996 1997 1996
Operating revenues (Millions):
Sales
<S> <C> <C> <C> <C>
Residential $ 534.5 $ 417.5 $1,157.1 $ 899.6
Commercial 158.9 117.4 323.5 234.5
Industrial 28.5 23.1 59.8 40.6
721.9 558.0 1,540.4 1,174.7
Transportation
Commercial 18.2 20.3 53.7 51.4
Industrial 13.8 17.9 49.9 61.5
32.0 38.2 103.6 112.9
Revenue taxes and other 66.0 56.3 133.7 108.2
$ 819.9 $ 652.5 $1,777.7 $1,395.8
Deliveries (Bcf):
Sales
Residential 106.7 115.0 238.7 246.6
Commercial 31.1 31.9 66.2 64.2
Industrial 5.0 6.7 13.3 11.9
142.8 153.6 318.2 322.7
Transportation
Commercial 28.3 33.8 68.0 72.7
Industrial 43.8 42.2 155.8 159.8
72.1 76.0 223.8 232.5
214.9 229.6 542.0 555.2
Average gas cost per Mcf sold $ 4.17 $ 2.79 $ 3.61 $ 2.55
Weather statistics:
Degree days 3,102 3,203 6,328 6,348
Percent colder (warmer) than normal (1.8) 1.4 3.5 4.0
Customers at end of period (Thousands):
Sales
Residential 1,695.1 1,668.0
Commercial 142.9 142.4
Industrial 11.6 11.7
1,849.6 1,822.1
Transportation
Commercial 18.3 17.4
Industrial 2.7 2.5
21.0 19.9
1,870.6 1,842.0
</TABLE>
<TABLE>
NICOR Inc. Page 11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Concluded)
OPERATING STATISTICS (Concluded)
Shipping
<CAPTION>
Three months ended Twelve months ended
March 31 March 31
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Operating revenues (Millions) $ 50.4 $ 44.7 $ 200.7 $168.5
Operating income (Millions) $ 5.6 $ 6.9 $ 20.9 $ 24.0
TEUs shipped (Thousands)
Southbound 24.9 21.0 101.3 78.9
Northbound 3.3 3.2 14.4 14.8
Interisland 2.2 1.6 8.1 5.5
30.4 25.8 123.8 99.2
Revenue per TEU $ 1,587 $ 1,642 $ 1,548 $1,616
Ports served 27 23
Vessels owned 14 14
</TABLE>
NICOR Inc. Page 12
PART II - Other Information
Item 1. Legal Proceedings
For information concerning legal proceedings, see Rate Proceeding and
Contingencies in Notes to the Consolidated Financial Statements
beginning on page 5, which are incorporated herein by reference.
Item 6. Exhibits and Reports on Form 8-K
(a) See Exhibit Index on page 14 filed herewith.
(b) The company did not file a report on Form 8-K during the first
quarter of 1997.
NICOR Inc. Page 13
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 May 13, 1997 By DAVID L.CYRANOSKI
David L.Cyranoski
Senior Vice President,
Secretary and Controller
NICOR Inc. Page 14
Exhibit Index
Exhibit
Number Description of Document
10.01 1997 Long-Term Incentive Program.
10.02 * NICOR Inc. 1997 Long-Term Incentive Plan. (Filed as an appendix
to the NICOR Inc. Proxy Statement, dated March 6, 1997.)
27.01 Financial Data Schedule.
* This exhibit has been previously filed with the Securities and Exchange
Commission and is incorporated herein by reference.
1997 LONG-TERM INCENTIVE PROGRAM
At the April 1997 meeting of the Compensation Committee, the
Committee approved the 1997 Long-Term Incentive Program,
participants and awards. Shown below is a full description of
the Long-Term Program for 1997.
Summary of 1997 Long-Term Incentive Program
- - Combination of Stock Options (SOs) and Dividend Performance
Units (DPUs).
- Annual grants of both, generally on a one-for-one basis.
- Nothing prevents the Committee from granting either
freestanding stock options or dividend performance units.
- - SOs have a ten-year term and would vest after three years.
- - DPUs would accumulate dividend equivalents over at least a
three-year period, and would pay out based on total
shareholder return over the period.
- - SOs and DPUs would be freestanding.
- - The company will also continue to make selected use of
restricted stock.
Description of Stock Options
- - Option exercise price set at fair market value on date of
grant.
- - Options vest after three years (100% in year three).
- - Options expire ten years from date of grant.
- - Options can be NQSOs or ISOs; NICOR plans to grant NQSOs in
1997.
Description of Dividend Performance Units
- - Each dividend performance unit accumulates all of the
dividends paid on one share of NICOR stock during the
three-year period. As an example, if NICOR's annual dividend
grows at $0.08 per year from its current level of $1.40, each
unit would be worth $4.38 at the end of three years:
-2-
Annual Dividend Cumulative
Year As of May Dividend Unit Value
1996 $1.32 -
1997 $1.40 $1.38
1998 $1.48 $2.84
1999 $1.56 $4.38
- - Accrued dividend equivalents are not reinvested in company
stock, nor is any interest paid on accrued dividends.
- - Dividend performance units accumulate no additional value
after the end of the three-year period.
- - Dividend performance units will pay out in cash, except that a
participant in the Stock Deferral Plan may elect to defer up
to 50% of their payout into that plan. Deferral elections
must meet the guidelines and timing of the Stock Deferral Plan
to be effective.
How Dividend Performance Unit Payouts are Determined
- - All dividend performance units pay out at the end of at least
three years.
- - The payout is modified by a performance multiplier which
ranges from 0 to 1.5.
- - The multiplier is based on NICOR total shareholder return
(TSR) over the performance period, as compared to the
performance of a utility industry peer group (S&P utility
group).
- - The following schedule shows the proposed dividend performance
unit multiplier schedule:
Dividend Performance Unit
Multiplier Schedule
NICOR TSR Performance
Percentile Relative Dividend Performance Unit
To S&P Utility Group Payout Multiple
75th Percentile or Higher 1.5 X
60th Percentile 1.0 X
50th Percentile 0.75 X
40th Percentile 0.5 X
25th Percentile 0.25 X
Below 25th Percentile 0 X
-3-
- - If NICOR total shareholder return for the performance period
is negative, the dividend performance unit payout multiple
will be zero.
Termination Provisions
In the case of death, disability or retirement:
- - Non-vested options and dividend performance units held for
more than one year (as of the date of death, disability or
retirement) will vest and/or pay out in full.
- - The full number of dividend performance units will pay out at
the end of the performance cycle, based on the normal per-unit
performance/pay out guidelines.
- - Vested options will remain exercisable for three years after
the date of death, disability or retirement.
- - The Compensation Committee can override these provisions at
its discretion.
In the case of termination of employment for any other reason,
there will be no accelerated vesting of unvested options and
dividend performance units. Vested options will remain
exercisable for three months after the date of termination. The
Compensation Committee can override these provisions at its
discretion.
NICOR Human Resources
April 1997
<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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1631
<OTHER-PROPERTY-AND-INVEST> 108
<TOTAL-CURRENT-ASSETS> 460
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 95
<TOTAL-ASSETS> 2294
<COMMON> 123
<CAPITAL-SURPLUS-PAID-IN> 10
<RETAINED-EARNINGS> 605
<TOTAL-COMMON-STOCKHOLDERS-EQ> 738
7
0
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