______________________________________________________________________
______________________________________________________________________
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 March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission Registrant; State of Incorporation; IRS Employer
File Number Address; and Telephone Number Identification No.
- ----------- ----------------------------------- ------------------
1-11337 WPS RESOURCES CORPORATION 39-1775292
(A Wisconsin Corporation)
700 North Adams Street
P. O. Box 19001
Green Bay, WI 54307-9001
414-433-1445
1-3016 WISCONSIN PUBLIC SERVICE CORPORATION 39-0715160
(A Wisconsin Corporation)
700 North Adams Street
P. O. Box 19001
Green Bay, WI 54307-9001
414-433-1445
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 issuers'
classes of common stock, as of the latest practicable date:
WPS RESOURCES CORPORATION Common stock, $1 par value,
23,896,962 shares outstanding
at May 1, 1995
WISCONSIN PUBLIC SERVICE CORPORATION Common stock, $4 par value,
23,896,962 shares outstanding
at May 1, 1995
______________________________________________________________________
______________________________________________________________________
<PAGE>
WPS RESOURCES CORPORATION
AND
WISCONSIN PUBLIC SERVICE CORPORATION
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1995
CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
WPS RESOURCES CORPORATION
Consolidated Statements of Income and
Retained Earnings 4
Consolidated Balance Sheets 5
Consolidated Statements of Capitalization 6
Consolidated Statements of Cash Flows 7
WISCONSIN PUBLIC SERVICE CORPORATION
Consolidated Statements of Income 8
Consolidated Balance Sheets 9
Consolidated Statements of Capitalization 10
Consolidated Statements of Cash Flows 11
Consolidated Statements of Retained Earnings 12
CONDENSED NOTES TO FINANCIAL STATEMENTS OF
WPS Resources Corporation and
Wisconsin Public Service Corporation 13
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations for
WPS Resources Corporation and
Wisconsin Public Service Corporation 14 - 18
PART II. OTHER INFORMATION
Item 5. Other Information 19 - 20
Item 6. Exhibits and Reports on Form 8-K 20
Signatures 21 - 22
Exhibit 27 Financial Data Schedule for
WPS Resources Corporation
Wisconsin Public Service Corporation
Exhibit 28-1 Statistical Analysis and Comments for
the Years 1989 through 1994 dated
April 1, 1995
WPS Resources Corporation
Wisconsin Public Service Corporation
Exhibit 28-2 Financial and Statistical Forecast dated
May 1, 1995
Wisconsin Public Service Corporation
-2-
<PAGE>
The unaudited interim financial statements presented herein include
the consolidated statements of WPS Resources Corporation and
Subsidiaries ("Company") as well as separate consolidated financial
statements for Wisconsin Public Service Corporation ("WPSC"). The
unaudited statements have been prepared by the Company and WPSC,
respectively, 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 the Company
and WPSC believe the disclosures are adequate to make the information
presented not misleading. The Company's and WPSC's consolidated
financial statements should be read in conjunction with the financial
statements and notes thereto incorporated by reference in the
respective Annual Reports on Form 10-K of WPS Resources Corporation
and Wisconsin Public Service Corporation for the year ended
December 31, 1994.
In the opinion of the Company and WPSC, their respective interim
financial statements filed as part of this Form 10-Q reflect all
adjustments necessary to present fairly the results for the respective
periods. Due to the effect of weather and other factors which are
characteristics of WPSC's utility operations, financial results for
the periods ended March 31, 1995 and 1994 are not necessarily
indicative of trends for any 12-month period.
This financial and other information is not given in connection with
any sale or offer to buy any security.
-3-
<PAGE>
<TABLE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
WPS RESOURCES CORPORATION
<CAPTION>
============================================================================================================
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS Three Months Ended
(Thousands, except share amounts) March 31
1995 1994
============================================================================================================
<S> <C> <C>
Operating revenues
Electric $121,100 $123,609
Gas 66,611 77,121
- ------------------------------------------------------------------------------------------------------------
Total operating revenues 187,711 200,730
============================================================================================================
Operating expenses
Electric production fuels 24,119 28,174
Purchased power 12,081 11,293
Gas purchased for resale 44,911 53,366
Other operating expenses 35,995 36,105
Maintenance 13,276 11,496
Depreciation and decommissioning 16,575 14,192
Taxes other than income 6,482 6,536
- ------------------------------------------------------------------------------------------------------------
Total operating expenses 153,439 161,162
============================================================================================================
Operating income 34,272 39,568
- ------------------------------------------------------------------------------------------------------------
Other income
Allowance for equity funds used during construction 25 20
Other, net 4,027 1,210
- ------------------------------------------------------------------------------------------------------------
Total other income 4,052 1,230
============================================================================================================
Income before interest expense 38,324 40,798
- ------------------------------------------------------------------------------------------------------------
Interest on long-term debt 5,931 5,955
Other interest 510 494
Allowance for borrowed funds used during construction (33) (35)
- ------------------------------------------------------------------------------------------------------------
Total interest expense 6,408 6,414
============================================================================================================
Income before income taxes 31,916 34,384
Income taxes 10,900 12,009
Preferred stock dividends of subsidiary 778 778
- ------------------------------------------------------------------------------------------------------------
Net income 20,238 21,597
============================================================================================================
Retained earnings at beginning of period 297,592 287,915
Cash dividends on common stock 10,873 10,634
- ------------------------------------------------------------------------------------------------------------
Retained earnings at end of period $306,957 $298,878
============================================================================================================
Average shares of common stock outstanding 23,897 23,897
Earnings per average share of common stock $0.85 $0.90
Dividend per share of common stock $0.455 $0.445
============================================================================================================
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
-4-
<PAGE>
<TABLE>
WPS RESOURCES CORPORATION
<CAPTION>
===================================================================================================================
CONSOLIDATED BALANCE SHEETS March 31 December 31
(Thousands) 1995 1994
===================================================================================================================
<S> <C> <C>
ASSETS
- -------------------------------------------------------------------------------------------------------------------
Utility plant
Electric $1,424,262 $1,412,666
Gas 205,995 202,903
- -------------------------------------------------------------------------------------------------------------------
Total 1,630,257 1,615,569
Accumulated depreciation and decommissioning (865,052) (846,505)
- -------------------------------------------------------------------------------------------------------------------
Total 765,205 769,064
Nuclear decommissioning trusts 67,684 64,147
Construction in progress 10,065 11,131
Nuclear fuel, less accumulated amortization 17,977 19,417
- -------------------------------------------------------------------------------------------------------------------
Net utility plant 860,931 863,759
===================================================================================================================
Current assets
Cash and equivalents 34,041 13,167
Customer and other receivables, net of reserves 65,587 60,029
Accrued utility revenues 26,052 28,820
Fossil fuel, at average cost 11,950 10,505
Gas in storage, at average cost 2,876 15,787
Materials and supplies, at average cost 21,894 20,585
Prepayments and other 16,002 21,122
- -------------------------------------------------------------------------------------------------------------------
Total current assets 178,402 170,015
===================================================================================================================
Regulatory assets 107,422 109,135
Investments and other assets 79,755 74,366
===================================================================================================================
Total $1,226,510 $1,217,275
===================================================================================================================
CAPITALIZATION AND LIABILITIES
- -------------------------------------------------------------------------------------------------------------------
Capitalization
Common stock equity $455,482 $446,540
Preferred stock of subsidiary
with no mandatory redemption 51,200 51,200
Long-term debt 310,384 309,945
- -------------------------------------------------------------------------------------------------------------------
Total capitalization 817,066 807,685
===================================================================================================================
Current liabilities
Note payable 10,000 10,000
Commercial paper - 12,500
Accounts payable 50,953 66,643
Accrued taxes 12,230 1,152
Accrued interest 5,294 8,068
Other 28,854 7,494
- -------------------------------------------------------------------------------------------------------------------
Total current liabilities 107,331 105,857
===================================================================================================================
Long-term liabilities and deferred credits
Accumulated deferred income taxes 126,107 126,639
Accumulated deferred investment tax credits 31,723 32,172
Regulatory liabilities 64,103 65,995
Long-term liabilities 80,180 78,927
- -------------------------------------------------------------------------------------------------------------------
Total long-term liabilities and deferred credits 302,113 303,733
===================================================================================================================
Total $1,226,510 $1,217,275
===================================================================================================================
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
-5-
<PAGE>
<TABLE>
WPS RESOURCES CORPORATION
<CAPTION>
===============================================================================================================
CONSOLIDATED STATEMENTS OF CAPITALIZATION March 31 December 31
(Thousands, except share amounts) 1995 1994
===============================================================================================================
<S> <C> <C>
Common stock equity
Common stock, $1 par value, 100,000,000 shares authorized;
and 23,896,962 shares outstanding $23,897 $23,897
Premium on capital stock 145,021 145,021
Retained earnings 306,957 297,592
ESOP loan guarantees (20,393) (19,970)
- ---------------------------------------------------------------------------------------------------------------
Total common stock equity 455,482 446,540
===============================================================================================================
Preferred stock - Wisconsin Public Service Corporation
Cumulative, $100 par value, 1,000,000 shares authorized;
with no mandatory redemption
Series Shares Outstanding
------ ------------------
5.00% 132,000 13,200 13,200
5.04% 30,000 3,000 3,000
5.08% 50,000 5,000 5,000
6.76% 150,000 15,000 15,000
6.88% 150,000 15,000 15,000
- ---------------------------------------------------------------------------------------------------------------
Total preferred stock 51,200 51,200
===============================================================================================================
Long-term debt
First mortgage bonds - Wisconsin Public Service Corporation
Series Year Due
------ --------
5-1/4% 1998 50,000 50,000
7.30% 2002 50,000 50,000
6.80% 2003 50,000 50,000
6-1/8% 2005 9,075 9,075
6.90% 2013 22,000 22,000
8.80% 2021 60,000 60,000
7-1/8% 2023 50,000 50,000
- ---------------------------------------------------------------------------------------------------------------
Total 291,075 291,075
Unamortized discount and premium on bonds, net (1,132) (1,154)
- ---------------------------------------------------------------------------------------------------------------
Total first mortgage bonds 289,943 289,921
- ---------------------------------------------------------------------------------------------------------------
ESOP loan guarantees 20,393 19,970
Other long-term debt 48 54
- ---------------------------------------------------------------------------------------------------------------
Total long-term debt 310,384 309,945
===============================================================================================================
Total capitalization $817,066 $807,685
===============================================================================================================
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
-6-
<PAGE>
<TABLE>
WPS RESOURCES CORPORATION
<CAPTION>
=============================================================================================================
CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended
(Thousands) March 31
1995 1994
=============================================================================================================
<S> <C> <C>
Cash flows from operating activities
Net income $20,238 $21,597
Adjustments to reconcile net income to net cash from
operating activities
Depreciation and decommissioning 16,575 14,192
Amortization of nuclear fuel and other 7,691 6,688
Deferred income taxes (3,053) 1,249
Investment tax credit restored (449) (453)
AFUDC equity (25) (20)
Pension funding (3,231) (2,752)
Postretirement funding 1,666 1,607
Deferred demand-side management expenditures (3,174) (3,682)
Other, net 5,415 (1,448)
Changes in
Customer and other receivables (5,558) (12,729)
Accrued utility revenues 2,768 8,964
Fossil fuel inventory (1,445) 168
Gas in storage 12,911 14,618
Accounts payable (15,690) (9,397)
Miscellaneous current and accruals 20,366 17,537
Accrued taxes 11,078 8,650
- -------------------------------------------------------------------------------------------------------------
Net cash from operating activities 66,083 64,789
=============================================================================================================
Cash flows from (used for) investing activities
Construction and nuclear fuel expenditures (13,467) (10,883)
Allowance for borrowed funds used during construction (33) (35)
Decommissioning funding (3,537) (2,003)
Purchase of investment securities (4,000) -
Other (799) (411)
- -------------------------------------------------------------------------------------------------------------
Net cash from (used for) investing activities (21,836) (13,332)
=============================================================================================================
Cash flows from (used for) financing activities
Redemption and maturities of first mortgage bonds - (1,000)
Change in commercial paper (12,500) (11,000)
Cash dividends on common stock (10,873) (10,634)
- -------------------------------------------------------------------------------------------------------------
Net cash from (used for) financing activities (23,373) (22,634)
=============================================================================================================
Net increase (decrease) in cash and equivalents 20,874 28,823
Cash and equivalents at beginning of period 13,167 5,391
=============================================================================================================
Cash and equivalents at end of period $34,041 $34,214
=============================================================================================================
Cash paid during period for
Interest, less amount capitalized $8,330 $7,957
Income taxes 2,211 3,279
Preferred stock dividends of subsidiary 778 778
=============================================================================================================
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
-7-
<PAGE>
<TABLE>
WISCONSIN PUBLIC SERVICE CORPORATION
<CAPTION>
=============================================================================================================
CONSOLIDATED STATEMENTS OF INCOME Three Months Ended
(Thousands, except share amounts) March 31
1995 1994
=============================================================================================================
<S> <C> <C>
Operating revenues
Electric $121,100 $123,609
Gas 59,360 77,121
- -------------------------------------------------------------------------------------------------------------
Total operating revenues 180,460 200,730
=============================================================================================================
Operating expenses
Electric production fuels 24,119 28,174
Purchased power 12,081 11,293
Gas purchased for resale 37,883 53,366
Other operating expenses 35,640 36,105
Maintenance 13,276 11,496
Depreciation and decommissioning 16,575 14,192
Federal income taxes 8,193 9,706
Investment tax credit restored (449) (453)
State income taxes 2,440 2,661
Gross receipts and other taxes 6,481 6,536
- -------------------------------------------------------------------------------------------------------------
Total operating expenses 156,239 173,076
=============================================================================================================
Operating income 24,221 27,654
- -------------------------------------------------------------------------------------------------------------
Other income
Allowance for equity funds used during construction 25 20
Other, net 4,015 1,210
Income taxes (710) (95)
- -------------------------------------------------------------------------------------------------------------
Total other income 3,330 1,135
=============================================================================================================
Income before interest expense 27,551 28,789
- -------------------------------------------------------------------------------------------------------------
Interest on long-term debt 5,931 5,955
Other interest 646 494
Allowance for borrowed funds used during construction (33) (35)
- -------------------------------------------------------------------------------------------------------------
Total interest expense 6,544 6,414
=============================================================================================================
Net income 21,007 22,375
Preferred stock dividend requirements 778 778
- -------------------------------------------------------------------------------------------------------------
Earnings on common stock $20,229 $21,597
=============================================================================================================
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
-8-
<PAGE>
<TABLE>
WISCONSIN PUBLIC SERVICE CORPORATION
<CAPTION>
===================================================================================================================
CONSOLIDATED BALANCE SHEETS March 31 December 31
(Thousands) 1995 1994
===================================================================================================================
<S> <C> <C>
ASSETS
- -------------------------------------------------------------------------------------------------------------------
Utility plant
Electric $1,424,262 $1,412,666
Gas 205,988 202,897
- -------------------------------------------------------------------------------------------------------------------
Total 1,630,250 1,615,563
Accumulated depreciation and decommissioning (865,052) (846,505)
- -------------------------------------------------------------------------------------------------------------------
Total 765,198 769,058
Nuclear decommissioning trusts 67,684 64,147
Construction in progress 10,065 11,131
Nuclear fuel, less accumulated amortization 17,977 19,417
- -------------------------------------------------------------------------------------------------------------------
Net utility plant 860,924 863,753
===================================================================================================================
Current assets
Cash and equivalents 27,418 3,449
Customer and other receivables, net of reserves 63,548 58,036
Accrued utility revenues 26,052 28,820
Fossil fuel, at average cost 11,950 10,505
Gas in storage, at average cost 2,440 15,783
Materials and supplies, at average cost 21,894 20,585
Prepayments and other 15,990 21,091
- -------------------------------------------------------------------------------------------------------------------
Total current assets 169,292 158,269
===================================================================================================================
Regulatory assets 107,422 109,135
Investments and other assets 73,296 74,069
===================================================================================================================
Total $1,210,934 $1,205,226
===================================================================================================================
CAPITALIZATION AND LIABILITIES
- -------------------------------------------------------------------------------------------------------------------
Capitalization
Common stock equity $436,386 $429,953
Preferred stock with no mandatory redemption 51,200 51,200
Long-term debt to parent 6,163 6,176
Long-term debt 310,384 309,945
- -------------------------------------------------------------------------------------------------------------------
Total capitalization 804,133 797,274
===================================================================================================================
Current liabilities
Note payable 10,000 10,002
Commercial paper - 12,500
Accounts payable 48,472 65,336
Accrued taxes 12,305 1,199
Accrued interest 5,294 8,068
Other 28,200 6,627
- -------------------------------------------------------------------------------------------------------------------
Total current liabilities 104,271 103,732
===================================================================================================================
Long-term liabilities and deferred credits
Accumulated deferred income taxes 126,524 127,126
Accumulated deferred investment tax credits 31,723 32,172
Regulatory liabilities 64,103 65,995
Long-term liabilities 80,180 78,927
- -------------------------------------------------------------------------------------------------------------------
Total long-term liabilities and deferred credits 302,530 304,220
===================================================================================================================
Total $1,210,934 $1,205,226
===================================================================================================================
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
-9-
<PAGE>
<TABLE>
WISCONSIN PUBLIC SERVICE CORPORATION
<CAPTION>
===============================================================================================================
CONSOLIDATED STATEMENTS OF CAPITALIZATION March 31 December 31
(Thousands, except share amounts) 1995 1994
===============================================================================================================
<S> <C> <C>
Common stock equity
Common stock $95,588 $95,588
Premium on capital stock 73,605 73,605
Retained earnings 287,586 280,730
ESOP loan guarantees (20,393) (19,970)
- ---------------------------------------------------------------------------------------------------------------
Total common stock equity 436,386 429,953
===============================================================================================================
Preferred stock
Cumulative, $100 par value, 1,000,000 shares authorized;
with no mandatory redemption
Series Shares Outstanding
------ ------------------
5.00% 132,000 13,200 13,200
5.04% 30,000 3,000 3,000
5.08% 50,000 5,000 5,000
6.76% 150,000 15,000 15,000
6.88% 150,000 15,000 15,000
- ---------------------------------------------------------------------------------------------------------------
Total preferred stock 51,200 51,200
===============================================================================================================
Long-term note to parent
Series Year Due
------ --------
8.76% 2014 6,163 6,176
===============================================================================================================
Long-term debt
First mortgage bonds
Series Year Due
------ --------
5-1/4% 1998 50,000 50,000
7.30% 2002 50,000 50,000
6.80% 2003 50,000 50,000
6-1/8% 2005 9,075 9,075
6.90% 2013 22,000 22,000
8.80% 2021 60,000 60,000
7-1/8% 2023 50,000 50,000
- ---------------------------------------------------------------------------------------------------------------
Total 291,075 291,075
Unamortized discount and premium on bonds, net (1,132) (1,153)
- ---------------------------------------------------------------------------------------------------------------
Total first mortgage bonds 289,943 289,922
- ---------------------------------------------------------------------------------------------------------------
ESOP loan guarantees 20,393 19,970
Other long-term debt 48 53
- ---------------------------------------------------------------------------------------------------------------
Total long-term debt 310,384 309,945
===============================================================================================================
Total capitalization $804,133 $797,274
===============================================================================================================
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
-10-
<PAGE>
<TABLE>
WISCONSIN PUBLIC SERVICE CORPORATION
<CAPTION>
=============================================================================================================
CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended
(Thousands) March 31
1995 1994
=============================================================================================================
<S> <C> <C>
Cash flows from operating activities
Net income $21,007 $22,375
Adjustments to reconcile net income to net cash from
operating activities
Depreciation and decommissioning 16,575 14,192
Amortization of nuclear fuel and other 7,691 6,688
Deferred income taxes (3,123) 1,249
Investment tax credit restored (449) (453)
AFUDC equity (25) (20)
Pension funding (3,231) (2,752)
Postretirement funding 1,666 1,607
Deferred demand-side management expenditures (3,174) (3,682)
Other, net 5,044 (1,483)
Changes in
Customer and other receivables (5,512) (12,729)
Accrued utility revenues 2,768 8,964
Fossil fuel (1,445) 168
Gas in storage 13,343 14,618
Accounts payable (16,864) (9,397)
Miscellaneous current and accruals 20,579 17,537
Accrued taxes 11,106 8,650
- -------------------------------------------------------------------------------------------------------------
Net cash from operating activities 65,956 65,532
=============================================================================================================
Cash flows from (used for) investing activities
Construction and nuclear fuel expenditures (13,500) (10,883)
Decommissioning funding (3,537) (2,003)
Other (799) (411)
- -------------------------------------------------------------------------------------------------------------
Net cash from (used for) investing activities (17,836) (13,297)
=============================================================================================================
Cash flows from (used for) financing activities
Redemption and maturities of first mortgage bonds - (1,000)
Change in commercial paper (12,500) (11,000)
Preferred stock dividends (778) (778)
Cash dividends on common stock (10,873) (10,634)
- -------------------------------------------------------------------------------------------------------------
Net cash from (used for) financing activities (24,151) (23,412)
=============================================================================================================
Net increase (decrease) in cash and equivalents 23,969 28,823
Cash and equivalents at beginning of period 3,449 5,391
=============================================================================================================
Cash and equivalents at end of period $27,418 $34,214
=============================================================================================================
Cash paid during period for
Interest, less amount capitalized $8,330 $7,957
Income taxes 2,198 3,279
=============================================================================================================
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
-11-
<PAGE>
<TABLE>
WISCONSIN PUBLIC SERVICE CORPORATION
<CAPTION>
=============================================================================================================
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS Three Months Ended
(Thousands) March 31
1995 1994
=============================================================================================================
<S> <C> <C>
Balance at beginning of period $280,730 $288,693
Add
Net income 21,007 22,375
- -------------------------------------------------------------------------------------------------------------
301,737 311,068
- -------------------------------------------------------------------------------------------------------------
Deduct
Cash dividends declared on preferred stock 778 1,556
Dividends declared on common stock 13,373 10,634
- -------------------------------------------------------------------------------------------------------------
14,151 12,190
- -------------------------------------------------------------------------------------------------------------
Balance at end of period $287,586 $298,878
=============================================================================================================
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
-13-
<PAGE>
WPS RESOURCES CORPORATION AND SUBSIDIARIES
WISCONSIN PUBLIC SERVICE CORPORATION
CONDENSED NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1995
NOTE 1. FINANCIAL INFORMATION
______________________________
The following consolidated financial statements have been prepared by
WPS Resources Corporation ("Company") and Wisconsin Public Service
Corporation ("WPSC"), without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission ("SEC") and, in
the opinion of Management, include all adjustments (consisting only of
normal recurring adjustments) necessary for a fair statement of
results for each period shown. 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 SEC rules and regulations. The
Company believes that the disclosures made are adequate to make the
information presented not misleading. It is recommended that these
financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's and WPSC's
latest annual reports on Form 10-K.
Because of the seasonal nature of the Company's operations, interim
results are not necessarily indicative of annual results.
NOTE 2. REGULATORY ASSETS
__________________________
In March 1995, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 121,
Accounting for the Impairment of Long-Lived Assets and Long-Lived
Assets to be Disposed Of. This Statement imposes stricter criteria
for regulatory assets by requiring that such assets be probable of
future recovery at each balance sheet date. WPSC anticipates adopting
this standard on January 1, 1996 and does not expect that adoption
will have a material impact on the financial position or results of
operations of WPSC based on the current regulatory structure in which
WPSC operates. This conclusion may change in the future as
competitive factors influence wholesale and retail pricing in this
industry.
-13-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
WPS Resources Corporation ("Company") is a holding company. Over 99%
of the Company's assets and revenues are derived from Wisconsin Public
Service Corporation ("WPSC"), an electric and gas utility.
Overview of First Quarter of 1995 Compared to First Quarter of 1994
Earnings per share declined from $.90 in 1994 to $.85 in 1995, or
5.6%. The most significant reason was a 16.3% decrease in heating
degree days due to warmer than normal weather, which reduced
residential electric and gas consumption (2.8% and 9.7%,
respectively).
Electric margins increased by $.8 million, or .9%, due primarily to
lower fuel costs.
First Quarter
___________________________
Electric Margins (000's) 1995 1994
____ ____
Revenues $121,100 $123,609
Fuel and purchases 36,200 39,467
_______ _______
Margin $ 84,900 $ 84,142
======= =======
Sales in kilowatt-hours (000) 2,760,398 2,660,792
Electric generating revenues decreased $2.5 million, or 2.0%, during
the first quarter of 1995 as compared to the first quarter of 1994.
Electric revenues were lower due to a 2.6% decrease in retail
Wisconsin rates that took effect January 1, 1995. This rate decrease
was partially offset by a 3.7% increase in kilowatt-hour ("Kwh")
sales. Residential Kwh sales decreased 2.8% due to warmer weather.
Commercial and industrial Kwh sales rose 5.0% reflecting customer
growth. Wholesale Kwh sales increased 9.1%.
Electric fuels and purchases decreased $3.3 million, or 8.3%, in the
first quarter of 1995 as compared to the same period in 1994. This
decrease was due to a 3.1% or $.7 million drop in coal-fired
generation and a 12.9% or $3.2 million reduction in coal costs from
burning less expensive lower sulphur coal. These decreases were
somewhat offset by an 18.3% increase in Kwh purchases of $.8 million
due to increased plant outages resulting from maintenance at some
plants.
-14-
<PAGE>
Gas margins decreased by $2.1 million, or 8.7%, due to the warmer than
normal weather.
First Quarter
_________________________
Gas Margins (000's) 1995 1994
____ ____
Revenues $66,611 $77,121
Purchase costs 44,911 53,366
______ ______
Margin $21,700 $23,755
====== ======
Volume in Therms (000) 261,321 240,240
The Public Service Commission of Wisconsin ("PSCW") allows WPSC to
pass on to its customers, through a purchased gas adjustment clause,
changes in the cost of gas.
Gas operating revenues decreased $10.5 million, or 13.6%, during the
first quarter of 1995 as compared to the first quarter of 1994. The
$10.5 million decrease is comprised of warmer than normal weather,
$13.0 million, and a refund from WPSC's primary gas supplier,
$4.7 million. (There was a reciprocal reduction recorded in gas
purchased for resale as a result of this refund, thus there was no
impact on net income.) Offsetting the decreases was a $7.3 million
increase in revenues, attributable to sales by WPS Energy Services,
Inc. ("WPSE"), an energy marketing subsidiary which began operations
in 1994.
Gas purchased for resale showed a net decrease of $8.5 million, or
15.8%, in the first quarter of 1995 as compared to the same period in
1994. WPSC gas purchased decreased due to the $4.7 million refund
discussed above, while WPSE gas purchases increased $7.0 million.
Maintenance increased by $1.8 million, or 15.5%, in the first quarter
of 1995 as compared to 1994 due to increased maintenance activity at
WPSC's coal-fired plants.
Depreciation and decommissioning increased $2.4 million, or 16.8%, in
the first quarter of 1995 compared to the same period in 1994. There
were two primary factors for this increase. The first factor was an
increase in decommissioning funding of $1.3 million that has been
considered in the rates that became effective January 1, 1995. The
second factor was additional depreciation of $1.1 million, recorded to
offset the gain on the decommissioning portfolio discussed below.
This maintains the balance between the depreciation reserve and the
decommissioning trusts.
Other income increased by $2.8 million, or 229.4%, in the first
quarter of 1995 as compared to the same period in 1994. This increase
was the result of two factors. The first factor was a $1.6 million
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<PAGE>
pretax gain on the decommissioning portfolio due to the sale of
certain investments. The second factor was receipt of $1.2 million in
insurance proceeds as the result of the death of a retired company
executive.
Income taxes decreased $1.1 million, or 9.2%, in the first quarter of
1995 as compared to the same period in 1994, due primarily to lower
earnings.
FINANCIAL CONDITION
WPSC requires large investments in capital assets used to deliver
electric and gas services. Most of the Company's capital expenditures
relate to WPSC's construction expenditures. WPSC maintains good
liquidity levels and a financial condition considered to be strong by
utility analysts. Internally generated funds exceeded the Company's
cash requirements resulting in reduced short-term borrowings during
the first three months of 1995, and higher short-term investments. No
funding difficulties are anticipated in the future. Pretax interest
coverage was 4.3 times for the 12 months ended March 31, 1995 for
WPSC.
WPSC's bond ratings are AA+ (Standard & Poor's and Duff & Phelps) and
Aa2 (Moody's).
For the three-year period 1995 to 1997, internally generated funds are
expected to lag construction expenditures and other investments
totaling $280 million by about $42 million. These expenditures are
comprised of $139 million for electric construction, $20 million for
nuclear fuel, $51 million for gas construction, $19 million for other
construction expenditures, and $51 million for nuclear decommissioning
and other investments. The Company currently expects to finance this
shortfall in internally generated funds through short-term debt. This
WPSC forecast does not include construction and financing of
$169 million for the Rhinelander Energy Center projected to be placed
in service in 1998 since this facility is expected to be constructed
through a subsidiary with project debt financing that is non-recourse
to WPSC.
WPSC's Kewaunee nuclear plant is currently licensed through the year
2013. Physical decommissioning of the plant is expected to occur
during the period 2014 to 2021 with additional expenditures being
incurred during the period 2022 to 2050. The estimated
decommissioning cost in current dollars is $155 million and the
undiscounted year of expenditure amount is $785 million. Management
does not anticipate decommissioning to have negative impacts on the
Company's liquidity or capital resources, since these costs are being
funded through external decommissioning trusts.
On January 1, 1995, WPSC reduced its Wisconsin retail electric rates
by 2.6%.
In March 1995, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 121,
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<PAGE>
Accounting for the Impairment of Long-Lived Assets and Long-Lived
Assets to be Disposed Of, effective January 1, 1996. This statement
imposes stricter criteria for regulatory assets by requiring that such
assets be probable of future recovery at each balance sheet date. At
this time, WPSC's management does not anticipate any material impact
when this new standard is adopted based on prior and current rate
treatment of such costs.
However, the Public Service Commission of Wisconsin ("PSCW") has
initiated proceedings to consider restructuring electric utility
regulation in Wisconsin, and one of the issues on their agenda is
stranded investment. Stranded investment is unrecovered investment in
facilities that are no longer economical to operate. Therefore, the
impact of any change in the current regulatory compact is not known at
this time.
TRENDS
During the 1995 maintenance and refueling outage of the Kewaunee
Nuclear Power Plant ("Kewaunee"), of which WPSC owns 41.2% and is the
operator, the steam generator tubes were inspected. The steam
generator tubes at Kewaunee are susceptible to the corrosion
characteristics seen throughout the nuclear industry. The inspection
of the steam generators revealed higher levels of tube degradation
than was anticipated. Continued use of degraded tubes raises concerns
regarding primary-to-secondary leakage of reactor coolant. Thus
degraded tubes are either repaired by sleeving or are removed from
servicing by plugging. The steam generators were designed with
approximately 15% heat transfer margin, meaning that full power
production should be sustainable with the equivalent of 15% of the
steam generator tubes plugged. Prior to the current outage, the
equivalent of approximately 12% of the tubes in the steam generators
were plugged with no loss of capacity.
The recently identified additional degraded tubes will be plugged and
taken out of service. With all degraded tubes removed from service,
the steam generators will be approximately 22% plugged. This means
that during the next operating cycle, which is expected to begin in
mid-May of 1995 and go through the fall of 1996, the plant's capacity
will be reduced by 4%, or approximately 8 megawatts. The continued
safe operation of the plant will not be impacted by the newly plugged
tubes or the reduced capacity level. There will be increased
maintenance and purchased power expenses resulting from the removal of
the degraded tubes and the purchase of replacement power. Current
estimates are that earnings for 1995 will be reduced by approximately
four cents per share.
Operation at this reduced power level should be temporary. Cost
effective repair technologies are available which will allow return of
the tubes to service as early as the next maintenance and refueling
shutdown, which is scheduled for the fall of 1996. Several tube
samples have been removed for further structural and metallurgical
examination in an effort to determine the best repair method. After
repairs are undertaken, as few as 9% of the tubes could remain
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<PAGE>
plugged, thus allowing resumption of full power operations. An
accurate estimate of the cost of recovering plugged tubes is not
available at this time.
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<PAGE>
Part II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
KEWAUNEE NUCLEAR POWER PLANT
The Kewaunee Nuclear Power Plant ("Kewaunee") was taken out of service
for scheduled maintenance and refueling on April 1, 1995 after having
generated electricity continuously for 327 days, a new plant record.
It is anticipated that Kewaunee will be returned to service during the
week of May 14. Wisconsin Public Service Corporation is the operator
and 41.2% owner of Kewaunee which is owned jointly with Wisconsin
Power and Light Company and Madison Gas and Electric Company who own
41% and 17.8%, respectively.
The steam generator tubes at Kewaunee are susceptible to corrosion
characteristics seen throughout the nuclear industry. During the
current outage, inspection of the steam generators revealed higher
levels of tube degradation than was anticipated. See Part I, Item 1.
Business - Electric Operations - Kewaunee Nuclear Power Plant in the
WPS Resources Corporation and Wisconsin Public Service Corporation
Form 10-Ks for the year ended December 31, 1994 for previous
discussion of this matter. Continued use of degraded tubes raises
concerns regarding primary-to-secondary leakage of reactor coolant.
Thus degraded tubes are either repaired by sleeving or are removed
from service by plugging. The steam generators were designed with
approximately 15% heat transfer margin, meaning that full power should
be sustainable with the equivalent of 15% of the steam generator tubes
plugged. Tube plugging and the build-up of deposits on the tubes
affect the heat-transfer capability of the steam generators to the
point where eventually full power operation is affected. Prior to the
current outage, the equivalent of approximately 12% of the tubes in
the steam generators were plugged with no loss of capacity.
The new indications are in the parent tubes of previously sleeved
tubes in the area of the joint at the upper end of the sleeves. While
indications of this type have been discovered in the past, the number
of indications detected during this outage has increased. With all
degraded tubes removed from service, the steam generators will be
approximately 22% plugged. This means that during the next operating
cycle the plant's capacity will be reduced by approximately 4%, or
from 525 megawatts net plant output to approximately 505 megawatts.
The continued safe operation of the plant will not be impacted by the
newly plugged tubes or the reduced capacity level. There will be
increased maintenance and purchased power expenses resulting from the
removal of the degraded tubes and the purchase of replacement power.
Current estimates are that earnings for 1995 will be reduced by
approximately four cents per share as a result of such increased
maintenance and purchased power expense.
Operation at this reduced power level should be temporary. Cost
effective repair technologies are available which will allow return of
the tubes to service as early as the next maintenance and refueling
shutdown which is scheduled for the fall of 1996. Several tube
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<PAGE>
samples have been removed for further structural and metallurgical
examination in an effort to determine the best repair method. After
repairs are undertaken, as few as 9% of the tubes could remain
plugged, thus allowing resumption of full power operation. An
accurate estimate of the cost of recovering plugged tubes is not
available at this time.
FERC PROPOSED RULEMAKING
A notice of proposed rulemaking ("NOPR") which would create a new
foundation for a more competitive electric industry was issued by the
Federal Energy Regulatory Commission ("FERC") on March 29. The NOPR
addresses two areas, open transmission access and recovery of stranded
investment. The proposed rules provide (1) that all utilities under
FERC jurisdiction, such as WPSC, would be required to file non-
discriminatory open access transmission tariffs which would be
available to all wholesale sellers and buyers of electric energy, and
(2) that the utilities would be required to take service under the
tariffs for their own wholesale sales and purchases of electricity.
The NOPR also endorses the principle of stranded asset recovery.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
The following documents are filed herewith:
Exhibit 27 Financial Data Schedule
WPS Resources Corporation
Wisconsin Public Service Corporation
Exhibit 28-1 Statistical Analysis and Comments for
the Years 1989 Through 1994 Dated
April 1, 1995
WPS Resources Corporation
Wisconsin Public Service Corporation
Exhibit 28-2 Financial and Statistical Forecast dated
May 1, 1995
Wisconsin Public Service Corporation
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant, WPS Resources Corporation, has duly caused this report
to be signed on its behalf by the undersigned thereunto duly
authorized.
WPS Resources Corporation
Date: May 12, 1995 /s/ D. L. Ford
________________________________
D. L. Ford
Controller
(Chief Accounting Officer)
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant, Wisconsin Public Service Corporation, has duly caused
this report to be signed on its behalf by the undersigned thereunto
duly authorized.
Wisconsin Public Service Corporation
Date: May 12, 1995 /s/ D. L. Ford
____________________________________
D. L. Ford
Controller
(Chief Accounting Officer)
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<PAGE>
WPSC RESOURCES CORPORATION AND
WISCONSIN PUBLIC SERVICE CORPORATION
EXHIBIT INDEX TO FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1995
Exhibit No. Description
___________ ___________
27 Financial Data Schedule
WPS Resources Corporation
Wisconsin Public Service Corporation
28-1 Statistical Analysis and Comments for the Years
1989 Through 1994 Dated April 1, 1995
WPS Resources Corporation
Wisconsin Public Service Corporation
28-2 Financial and Statistical Forecast dated May 1,
1995
Wisconsin Public Service Corporation
<TABLE> <S> <C>
<ARTICLE> UT
<CIK> 0000916863
<NAME> WPS RESOURCES CORPORATION
<SUBSIDIARY>
<NUMBER> 1
<NAME> WISCONSIN PUBLIC SERVICE CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 860,931
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 178,402
<TOTAL-DEFERRED-CHARGES> 107,422
<OTHER-ASSETS> 79,755
<TOTAL-ASSETS> 1,226,510
<COMMON> 23,897
<CAPITAL-SURPLUS-PAID-IN> 145,021
<RETAINED-EARNINGS> 286,564
<TOTAL-COMMON-STOCKHOLDERS-EQ> 455,482
0
51,200
<LONG-TERM-DEBT-NET> 310,384
<SHORT-TERM-NOTES> 10,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 399,444
<TOT-CAPITALIZATION-AND-LIAB> 1,226,510
<GROSS-OPERATING-REVENUE> 187,711
<INCOME-TAX-EXPENSE> 10,900
<OTHER-OPERATING-EXPENSES> 153,439
<TOTAL-OPERATING-EXPENSES> 153,439<F1>
<OPERATING-INCOME-LOSS> 34,272<F2>
<OTHER-INCOME-NET> 4,052
<INCOME-BEFORE-INTEREST-EXPEN> 38,324<F3>
<TOTAL-INTEREST-EXPENSE> 6,408
<NET-INCOME> 21,016
778
<EARNINGS-AVAILABLE-FOR-COMM> 20,238
<COMMON-STOCK-DIVIDENDS> 10,873
<TOTAL-INTEREST-ON-BONDS> 8,330
<CASH-FLOW-OPERATIONS> 66,083
<EPS-PRIMARY> .85
<EPS-DILUTED> .85
<FN>
<F1>Operating expenses exclude income taxes of $10,900.
<F2>Operating income is before income taxes of $10,900.
<F3>Income before interest expense is before income taxes of $10,900.
</FN>
</TABLE>
WPS RESOURCES CORPORATION
STATISTICAL ANALYSIS AND COMMENTS
YEARS 1989-1994
FOR ANALYSTS AND PROFESSIONAL INVESTORS
TABLE OF CONTENTS
-----------------
Section Page
- ------- ----
Capitalization Ratios 1
Common Price Range 1
Earnings Analysis 1
Quarterly Earnings Analysis 2
Dividend Analysis 2
Patrick D. Schrickel
(414) 433-1036
Ralph G. Baeten
(414) 433-1449
April 1, 1995
<PAGE>
<TABLE>
CAPITALIZATION RATIOS
<CAPTION>
1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Common (%) 55.3 54.3 52.6 49.0 53.4 54.9
Preferred 6.3 6.4 6.5 6.8 7.4 7.6
Long-Term Debt 38.4 39.3 40.9 44.2 39.2 37.5
----- ----- ----- ----- ----- -----
Total (%) 100.0 100.0 100.0 100.0 100.0 100.0
Short-Term (%) 2.8 2.6 2.5 1.7 5.0 5.3
<fm>
COMMENT: ESOP Loan Guarantee causes decrease in Common and increase in Long-Term Debt ratios.
For PSCW ratemaking, leveraged ESOP guarantees are not deducted from common equity as
prescribed by GAAP.
</TABLE>
<TABLE>
COMMON PRICE RANGE
<CAPTION>
1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Market High 33 5/8 36 1/2 32 1/4 28 1/4 24 5/8 24 7/8
Market Low 26 1/4 30 1/8 26 1/8 22 1/4 19 3/4 20 1/2
Year-End 26 3/4 33 5/8 31 3/4 28 1/4 23 5/8 23 3/4
</TABLE>
<TABLE>
EARNINGS ANALYSIS
<CAPTION>
1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Av EPS ($) 2.21 2.47 2.35 2.23 2.00 1.98
% Chg (10.5) 5.1 5.4 11.5 1.0 (13.2)
AFUDC/Share ($) .01 .02 .04 .01 .03 .04
Shares Out (MM)
Ending 23.9 23.9 23.8 22.9 22.9 22.9*
Average 23.9 23.9 23.4 22.9 22.9 23.1
Dilution (%)
Full None .2 4.0 None None (1.4)*
Average None 2.3 2.0 None None (.5)*
<FN>
* During 1989, the company repurchased 311,932 shares.
</TABLE>
-1-
<PAGE>
<TABLE>
QUARTERLY EARNINGS ANALYSIS
<CAPTION>
1994 1993 1992 1991 1990 1989
-------- --------- -------- --------- -------- --------
EPS % EPS % EPS % EPS % EPS % EPS %
($) Chg (%) Chg ($) Chg ($) Chg ($) Chg ($) Chg
--- --- --- --- --- --- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1st .90 6 .85 10 .77 13 .68 15 .59 (26) .80 (5)
2nd .31 (31) .45 50 .30 15 .26 (16) .31 41 .22 (27)
3rd .54 (18) .66 32 .50 (24) .66 25 .53 33 .40 (26)
4th .46 (10) .51 (35) .78 24 .63 11 .57 2 .56 (7)
Total 2.21 (11) 2.47 5 2.35 5 2.23 12 2.00 1 1.98 (13)
<FN>
COMMENT: On January 1, 1990, the Company changed its method of accounting for revenue related
to gas supplier demand costs. This change has the effect of reducing first and
fourth quarter revenues and earnings while increasing revenues and earnings during
the second quarter and third quarters; however, the effect on annual earnings is
minimal.
</TABLE>
<TABLE>
DIVIDEND ANALYSIS
<CAPTION>
1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Div Paid ($) 1.80 1.76 1.72 1.68 1.64 1.60
% EPS 81.4 71.3 73.2 75.3 82.0 80.8
Book Value ($) 18.69* 18.18* 17.33* 16.14* 16.26* 16.30*
Ind Rate ($) 1.82 1.78 1.74 1.70 1.66 1.62
% Book Value 10.3 9.8 10.0 10.5 10.2 9.9
Cash Dividend Coverage 2.68 3.12 3.16 3.21 2.74 2.88
<FN>
* Reflects subtraction of ESOP Loan Guarantee from common equity.
COMMENT: 1994 was the 36th consecutive year in which dividends paid per share were increased.
</TABLE>
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