______________________________________________________________________________
______________________________________________________________________________
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 September 30, 1996
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
414-433-1466
1-3016 WISCONSIN PUBLIC SERVICE CORPORATION 39-0715160
(A Wisconsin Corporation)
700 North Adams Street
P. O. Box 19001
Green Bay, WI 54307-9001
414-433-1466
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.
WPS Resources Corporation Yes [x] No [ ]
Wisconsin Public Service Corporation 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
October 25, 1996
WISCONSIN PUBLIC SERVICE CORPORATION Common stock, $4 par value,
23,896,962 shares outstanding at
October 25, 1996
______________________________________________________________________________
______________________________________________________________________________
<PAGE>
WPS RESOURCES CORPORATION
AND
WISCONSIN PUBLIC SERVICE CORPORATION
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1996
CONTENTS
Page
INTRODUCTION 4
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
WPS RESOURCES CORPORATION
Consolidated Statements of Income and
Retained Earnings 5
Consolidated Balance Sheets 6
Consolidated Statements of Capitalization 7
Consolidated Statements of Cash Flows 8
WISCONSIN PUBLIC SERVICE CORPORATION
Consolidated Statements of Income 9
Consolidated Balance Sheets 10
Consolidated Statements of Capitalization 11
Consolidated Statements of Cash Flows 12
Consolidated Statements of Retained Earnings 13
CONDENSED NOTES TO FINANCIAL STATEMENTS OF
WPS Resources Corporation and
Wisconsin Public Service Corporation 14
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations for
WPS Resources Corporation and
Wisconsin Public Service Corporation 15 - 25
PART II. OTHER INFORMATION
Item 5. Other Information 26 - 29
Item 6. Exhibits and Reports on Form 8-K 30
Signatures 31 - 32
-2-
<PAGE>
EXHIBIT INDEX 33
Exhibit 3(ii) By-Laws
WPS Resources Corporation
Wisconsin Public Service Corporation
Exhibit 11 Statement Regarding Computation of Per Share
Earnings
WPS Resources Corporation
Exhibit 27 Financial Data Schedule
WPS Resources Corporation
Wisconsin Public Service Corporation
-3-
<PAGE>
<PAGE>
INTRODUCTION
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. The Company and WPSC
believe, however, that 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 the Company and WPSC
for the year ended December 31, 1995.
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 influence of weather and other factors which are
characteristic of WPSC's utility operations, financial results for the
periods ended September 30, 1996 and 1995 are not necessarily
indicative of trends for any 12-month period.
-4-
<PAGE>
<TABLE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
WPS RESOURCES CORPORATION
<CAPTION>
=============================================================================================================================
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS Three Months Ended Nine Months Ended
(Thousands, except per share amounts) September 30 September 30
1996 1995 1996 1995
=============================================================================================================================
<S> <C> <C> <C> <C>
Operating revenues
Electric $129,482 $130,800 $368,974 $369,318
Gas 49,275 35,948 242,557 147,294
Other 223 - 667 -
- -----------------------------------------------------------------------------------------------------------------------------
Total operating revenues 178,980 166,748 612,198 516,612
=============================================================================================================================
Operating expenses
Electric production fuels 27,593 28,654 78,411 79,161
Purchased power 9,938 9,890 26,270 32,367
Gas purchased for resale 42,746 27,694 199,222 106,567
Other operating expenses 41,784 34,383 121,810 110,162
Maintenance 11,425 10,288 33,198 38,826
Depreciation and decommissioning 16,176 16,579 48,716 48,991
Taxes other than income 6,802 6,567 20,198 19,415
- -----------------------------------------------------------------------------------------------------------------------------
Total operating expenses 156,464 134,055 527,825 435,489
=============================================================================================================================
Operating income 22,516 32,693 84,373 81,123
- -----------------------------------------------------------------------------------------------------------------------------
Other income
Allowance for equity funds used during construction 35 54 105 127
Other, net (177) (934) 2,701 4,981
- -----------------------------------------------------------------------------------------------------------------------------
Total other income (142) (880) 2,806 5,108
=============================================================================================================================
Income before interest expense 22,374 31,813 87,179 86,231
- -----------------------------------------------------------------------------------------------------------------------------
Interest on long-term debt 5,346 5,654 16,187 17,243
Other interest 743 620 2,017 1,874
Allowance for borrowed funds used during construction (28) 32 (92) (49)
- -----------------------------------------------------------------------------------------------------------------------------
Total interest expense 6,061 6,306 18,112 19,068
=============================================================================================================================
Income before income taxes 16,313 25,507 69,067 67,163
Income taxes 5,150 8,997 22,709 22,994
Preferred stock dividends of subsidiary 778 778 2,333 2,333
- -----------------------------------------------------------------------------------------------------------------------------
Net income 10,385 15,732 44,025 41,836
=============================================================================================================================
Retained earnings at beginning of period 320,381 301,950 308,965 297,592
Cash dividends on common stock 11,351 11,112 33,575 32,858
- -----------------------------------------------------------------------------------------------------------------------------
Retained earnings at end of period $319,415 $306,570 $319,415 $306,570
=============================================================================================================================
Average shares of common stock outstanding 23,893 23,897 23,893 23,897
Earnings per average share of common stock $0.43 $0.66 $1.84 $1.75
Dividend per share of common stock $0.475 $0.465 $1.405 $1.375
=============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
-5-
<PAGE>
<TABLE>
WPS RESOURCES CORPORATION
<CAPTION>
==================================================================================================
CONSOLIDATED BALANCE SHEETS September 30 December 31
(Thousands) 1996 1995
==================================================================================================
<S> <C> <C>
ASSETS
- --------------------------------------------------------------------------------------------------
Utility plant
Electric $1,467,022 $1,441,126
Gas 236,686 229,604
- --------------------------------------------------------------------------------------------------
Total 1,703,708 1,670,730
Less - Accumulated depreciation and decommissioning 940,672 905,519
- --------------------------------------------------------------------------------------------------
Total 763,036 765,211
Nuclear decommissioning trusts 94,388 82,109
Construction in progress 9,981 8,463
Nuclear fuel, less accumulated amortization 19,381 14,275
- --------------------------------------------------------------------------------------------------
Net utility plant 886,786 870,058
==================================================================================================
Current assets
Cash and equivalents 3,928 6,533
Customer and other receivables, net of reserves 67,373 79,301
Accrued utility revenues 19,167 37,586
Fossil fuel, at average cost 11,067 8,701
Gas in storage, at average cost 27,678 10,076
Materials and supplies, at average cost 21,655 20,312
Prepayments and other 16,737 23,576
- --------------------------------------------------------------------------------------------------
Total current assets 167,605 186,085
==================================================================================================
Regulatory assets 100,943 111,101
Investments and other assets 117,265 99,499
==================================================================================================
Total $1,272,599 $1,266,743
==================================================================================================
CAPITALIZATION AND LIABILITIES
- --------------------------------------------------------------------------------------------------
Capitalization
Common stock equity $473,550 $463,441
Preferred stock of subsidiary
with no mandatory redemption 51,200 51,200
Long-term debt 297,924 306,590
- --------------------------------------------------------------------------------------------------
Total capitalization 822,674 821,231
==================================================================================================
Current liabilities
Notes payable 22,216 15,000
Commercial paper 21,000 11,500
Accounts payable 55,273 67,483
Accrued taxes 1,982 1,744
Accrued interest 5,237 8,378
Gas refunds 1,202 6,879
Other 8,243 14,668
- --------------------------------------------------------------------------------------------------
Total current liabilities 115,153 125,652
==================================================================================================
Long-term liabilities and deferred credits
Accumulated deferred income taxes 131,312 135,958
Accumulated deferred investment credits 29,114 30,447
Regulatory liabilities 49,142 49,924
Environmental remediation liabilities 41,697 41,697
Long-term liabilities 83,507 61,834
- --------------------------------------------------------------------------------------------------
Total long-term liabilities and deferred credits 334,772 319,860
==================================================================================================
Total $1,272,599 $1,266,743
==================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
-6-
<PAGE>
<TABLE>
WPS RESOURCES CORPORATION
<CAPTION>
======================================================================================================
CONSOLIDATED STATEMENTS OF CAPITALIZATION September 30 December 31
(Thousands, except share amounts) 1996 1995
- ------------------------------------------------------------------------------------------------------
<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 319,415 308,965
Shares in deferred compensation trust, 10,072 shares at average
cost of $31.97 per share (322) -
ESOP loan guarantees (14,461) (16,346)
Net unrealized security gains (net of taxes) - 1,904
- ------------------------------------------------------------------------------------------------------
Total common stock equity 473,550 463,441
======================================================================================================
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 53,100 60,000
7-1/8% 2023 50,000 50,000
- ------------------------------------------------------------------------------------------------------
Total 284,175 291,075
Unamortized discount and premium on bonds, net (1,000) (1,066)
- ------------------------------------------------------------------------------------------------------
Total first mortgage bonds 283,175 290,009
- ------------------------------------------------------------------------------------------------------
ESOP loan guarantees 14,461 16,346
Other long-term debt 288 235
- ------------------------------------------------------------------------------------------------------
Total long-term debt 297,924 306,590
======================================================================================================
Total capitalization $822,674 $821,231
======================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
-7-
<PAGE>
<TABLE>
WPS RESOURCES CORPORATION
<CAPTION>
=============================================================================================
CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended
(Thousands) September 30
1996 1995
=============================================================================================
<S> <C> <C>
Cash flows from operating activities
Net income $44,025 $41,836
Adjustments to reconcile net income to net cash from
operating activities
Depreciation and decommissioning 48,716 48,991
Amortization of nuclear fuel and other 22,905 21,700
Deferred income taxes (6,144) (3,791)
Investment tax credit restored (1,333) (1,285)
AFUDC equity (105) (127)
Pension income (9,321) (9,919)
Postretirement funding 5,363 5,188
Deferred demand-side management expenditures (5,197) (6,447)
Other, net 7,571 (216)
Changes in
Customer and other receivables 11,928 6,786
Accrued utility revenues 18,419 10,832
Fossil fuel inventory (2,366) 2,233
Gas in storage (17,602) 175
Accounts payable (12,217) (22,291)
Miscellaneous current and accrued liabilities (6,425) 11,350
Accrued taxes 238 2,266
Gas refunds (5,677) -
- ---------------------------------------------------------------------------------------------
Net cash from operating activities 92,778 107,281
=============================================================================================
Cash flows from (used for) investing activities
Construction of utility plant and nuclear fuel expenditures (62,833) (47,628)
Allowance for borrowed funds used during construction (92) (50)
Purchase of other property and equipment (2,024) -
Decommissioning funding (6,734) (9,131)
Purchase of investments (625) (4,000)
Other 1,006 991
- ---------------------------------------------------------------------------------------------
Net cash from (used for) investing activities (71,302) (59,818)
=============================================================================================
Cash flows from (used for) financing activities
Redemption of first mortgage bonds (6,900) -
Change in notes payable 7,216 -
Change in commercial paper 9,500 (12,500)
Cash dividends on common stock (33,575) (32,858)
Purchase of deferred compensation stock (322) -
- ---------------------------------------------------------------------------------------------
Net cash from (used for) financing activities (24,081) (45,358)
=============================================================================================
Net increase (decrease) in cash and equivalents (2,605) 2,105
Cash and equivalents at beginning of period 6,533 13,167
=============================================================================================
Cash and equivalents at end of period $3,928 $15,272
=============================================================================================
Cash paid during period for
Interest, less amount capitalized $18,816 $16,289
Income taxes 27,424 19,500
Preferred stock dividends of subsidiary 2,333 2,333
=============================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
-8-
<PAGE>
<TABLE>
WISCONSIN PUBLIC SERVICE CORPORATION
<CAPTION>
=============================================================================================================================
CONSOLIDATED STATEMENTS OF INCOME Three Months Ended Nine Months Ended
(Thousands) September 30 September 30
1996 1995 1996 1995
=============================================================================================================================
<S> <C> <C> <C> <C>
Operating revenues
Electric $129,322 $130,800 $368,814 $369,318
Gas 25,758 25,743 144,402 118,616
- -----------------------------------------------------------------------------------------------------------------------------
Total operating revenues 155,080 156,543 513,216 487,934
=============================================================================================================================
Operating expenses
Electric production fuels 27,498 28,654 78,316 79,161
Purchased power 9,873 9,890 26,205 32,367
Gas purchased for resale 18,186 17,698 100,146 78,440
Other operating expenses 38,699 33,871 115,841 108,769
Maintenance 11,425 10,288 33,198 38,826
Depreciation and decommissioning 15,786 16,579 47,798 48,991
Federal income taxes 6,424 7,980 21,326 18,813
Investment tax credit restored (444) (387) (1,333) (1,285)
State income taxes 2,003 2,319 6,679 5,650
Gross receipts and other taxes 6,802 6,567 20,198 19,414
- -----------------------------------------------------------------------------------------------------------------------------
Total operating expenses 136,252 133,459 448,374 429,146
=============================================================================================================================
Operating income 18,828 23,084 64,842 58,788
- -----------------------------------------------------------------------------------------------------------------------------
Other income
Allowance for equity funds used during construction 35 54 105 127
Other, net 1,199 (741) 4,225 5,148
Income taxes (190) 718 (474) (109)
- -----------------------------------------------------------------------------------------------------------------------------
Total other income 1,044 31 3,856 5,166
=============================================================================================================================
Income before interest expense 19,872 23,115 68,698 63,954
- -----------------------------------------------------------------------------------------------------------------------------
Interest on long-term debt 5,637 5,795 16,876 17,657
Other interest 624 612 1,840 1,864
Allowance for borrowed funds used during construction (28) 32 (92) (49)
- -----------------------------------------------------------------------------------------------------------------------------
Total interest expense 6,233 6,439 18,624 19,472
=============================================================================================================================
Net income 13,639 16,676 50,074 44,482
Preferred stock dividend requirements 778 778 2,333 2,333
- -----------------------------------------------------------------------------------------------------------------------------
Earnings on common stock $12,861 $15,898 $47,741 $42,149
=============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
-9-
<PAGE>
<TABLE>
WISCONSIN PUBLIC SERVICE CORPORATION
<CAPTION>
===================================================================================================
CONSOLIDATED BALANCE SHEETS September 30 December 31
(Thousands) 1996 1995
===================================================================================================
<S> <C> <C>
ASSETS
- ---------------------------------------------------------------------------------------------------
Utility plant
Electric $1,467,022 $1,441,126
Gas 235,055 228,346
- ---------------------------------------------------------------------------------------------------
Total 1,702,077 1,669,472
Less - Accumulated depreciation and decommissioning 940,475 905,427
- ---------------------------------------------------------------------------------------------------
Total 761,602 764,045
Nuclear decommissioning trusts 94,388 82,109
Construction in progress 9,981 8,463
Nuclear fuel, less accumulated amortization 19,381 14,275
- ---------------------------------------------------------------------------------------------------
Net utility plant 885,352 868,892
===================================================================================================
Current assets
Cash and equivalents 2,362 4,471
Customer and other receivables, net of reserves 52,644 62,156
Accrued utility revenues 19,167 37,586
Fossil fuel, at average cost 11,067 8,701
Gas in storage, at average cost 21,960 9,903
Materials and supplies, at average cost 21,341 20,312
Prepayments and other 16,071 23,526
- ---------------------------------------------------------------------------------------------------
Total current assets 144,612 166,655
===================================================================================================
Regulatory assets 100,943 111,101
Investments and other assets 93,352 86,763
===================================================================================================
Total $1,224,259 $1,233,411
===================================================================================================
CAPITALIZATION AND LIABILITIES
- ---------------------------------------------------------------------------------------------------
Capitalization
Common stock equity $448,522 $445,375
Preferred stock with no mandatory redemption 51,200 51,200
Long-term debt to parent 14,619 6,101
Long-term debt 297,924 306,590
- ---------------------------------------------------------------------------------------------------
Total capitalization 812,265 809,266
===================================================================================================
Current liabilities
Note payable 10,000 10,000
Commercial paper 21,000 11,500
Accounts payable 41,429 52,881
Accrued taxes 1,982 1,744
Accrued interest 5,237 8,378
Gas refunds 1,202 6,879
Other 10,291 12,635
- ---------------------------------------------------------------------------------------------------
Total current liabilities 91,141 104,017
===================================================================================================
Long-term liabilities and deferred credits
Accumulated deferred income taxes 131,604 136,226
Accumulated deferred investment tax credits 29,114 30,447
Regulatory liabilities 49,142 49,924
Environmental remediation liabilities 41,697 41,697
Long-term liabilities 69,296 61,834
- ---------------------------------------------------------------------------------------------------
Total long-term liabilities and deferred credits 320,853 320,128
===================================================================================================
Total $1,224,259 $1,233,411
===================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
-10-
<PAGE>
<TABLE>
WISCONSIN PUBLIC SERVICE CORPORATION
<CAPTION>
=====================================================================================================
CONSOLIDATED STATEMENTS OF CAPITALIZATION September 30 December 31
(Thousands, except share amounts) 1996 1995
=====================================================================================================
<S> <C> <C>
Common stock equity
Common stock $95,588 $95,588
Premium on capital stock 73,842 73,842
Retained earnings 293,553 290,387
ESOP loan guarantees (14,461) (16,346)
Net unrealized security gains (net of taxes) - 1,904
- -----------------------------------------------------------------------------------------------------
Total common stock equity 448,522 445,375
=====================================================================================================
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 6,035 6,101
7.35% 2016 8,584 -
- -----------------------------------------------------------------------------------------------------
Total 14,619 6,101
=====================================================================================================
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 53,100 60,000
7-1/8% 2023 50,000 50,000
- -----------------------------------------------------------------------------------------------------
Total 284,175 291,075
Unamortized discount and premium on bonds, net (1,000) (1,066)
- -----------------------------------------------------------------------------------------------------
Total first mortgage bonds 283,175 290,009
- -----------------------------------------------------------------------------------------------------
ESOP loan guarantees 14,461 16,346
Other long-term debt 288 235
- -----------------------------------------------------------------------------------------------------
Total long-term debt 297,924 306,590
=====================================================================================================
Total capitalization $812,265 $809,266
=====================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
-11-
<PAGE>
<TABLE>
WISCONSIN PUBLIC SERVICE CORPORATION
<CAPTION>
=============================================================================================
CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended
(Thousands) September 30
1996 1995
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities
Net income $50,074 $44,482
Adjustments to reconcile net income to net cash from
operating activities
Depreciation and decommissioning 47,798 48,991
Amortization of nuclear fuel and other 22,254 21,700
Deferred income taxes (6,120) (3,808)
Investment tax credit restored (1,333) (1,285)
AFUDC equity (105) (127)
Pension income (9,321) (9,919)
Postretirement funding 5,363 5,188
Deferred demand-side management expenditures (5,197) (6,447)
Other, net 10,038 (225)
Changes in
Customer and other receivables 9,512 9,160
Accrued utility revenues 18,419 10,832
Fossil fuel (2,366) 2,233
Gas in storage (12,057) 1,103
Accounts payable (11,452) (27,008)
Miscellaneous current and accrued liabilities (5,485) 11,261
Accrued taxes 238 2,219
Gas refunds (5,677) -
- ---------------------------------------------------------------------------------------------
Net cash from operating activities 104,583 108,350
=============================================================================================
Cash flows from (used for) investing activities
Construction of utility plant and nuclear fuel expenditures (62,925) (47,678)
Purchase of other property and equipment (2,024) -
Decommissioning funding (6,734) (9,131)
Other 681 991
- ---------------------------------------------------------------------------------------------
Net cash from (used for) investing activities (71,002) (55,818)
=============================================================================================
Cash flows from (used for) financing activities
Redemption of first mortgage bonds (6,900) -
Proceeds of long-term debt from parent 8,618 -
Change in commercial paper 9,500 (12,500)
Preferred stock dividends (2,333) (2,333)
Cash dividends on common stock (44,575) (32,858)
- ---------------------------------------------------------------------------------------------
Net cash from (used for) financing activities (35,690) (47,691)
=============================================================================================
Net increase (decrease) in cash and equivalents (2,109) 4,841
Cash and equivalents at beginning of period 4,471 3,449
=============================================================================================
Cash and equivalents at end of period $2,362 $8,290
=============================================================================================
Cash paid during period for
Interest, less amount capitalized $18,816 $16,289
Income taxes 28,745 19,479
=============================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
-12-
<PAGE>
<TABLE>
WISCONSIN PUBLIC SERVICE CORPORATION
<CAPTION>
=============================================================================================
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS Nine Months Ended
(Thousands) September 30
1996 1995
=============================================================================================
<S> <C> <C>
Balance at beginning of period $290,387 $280,730
Add Net income 50,074 44,482
- ---------------------------------------------------------------------------------------------
340,461 325,212
- ---------------------------------------------------------------------------------------------
Deduct
Cash dividends declared on preferred stock 2,333 2,333
Dividends declared on common stock 33,575 32,858
Dividend to parent 11,000 2,500
- ---------------------------------------------------------------------------------------------
46,908 37,691
- ---------------------------------------------------------------------------------------------
Balance at end of period $293,553 $287,521
=============================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
-13-
<PAGE>
WPS RESOURCES CORPORATION AND SUBSIDIARIES
WISCONSIN PUBLIC SERVICE CORPORATION
CONDENSED NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
NOTE 1. FINANCIAL INFORMATION
______________________________
The foregoing 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. LONG-TERM DEBT
_______________________
In June 1996, Wisconsin Public Service Corporation repurchased
$6.9 million of the 8.80% bond series due in 2021. The repurchase was
funded through short-term borrowings. The repurchase premium and the
unamortized discount from the original issue have been deferred and
will be amortized over approximately a two-year period to correspond
with ratemaking treatment.
-14-
<PAGE>
<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.
Approximately 96% and 84% of the Company's assets and revenues,
respectively, are derived from Wisconsin Public Service Corporation
("WPSC"), an electric and gas utility.
OVERVIEW OF THIRD QUARTER OF 1996 COMPARED TO THIRD QUARTER OF 1995
Earnings per share decreased 34.8% from $.66 in 1995 to $.43 in 1996.
The primary reasons for this decrease are lower earnings of $0.13 per
share that resulted from higher operating expenses at WPSC and losses
at the Company's non-regulated subsidiaries of $0.10 per share that
also resulted from higher operating expenses.
ELECTRIC OPERATIONS
Electric margins decreased by $.3 million, or .3%, even though overall
electric kilowatt-hour ("Kwh") sales increased by 1.4%. The reduction
was caused by a shift in sales mix from residential customers to
commercial, industrial, and wholesale customers which have lower
margins. A portion of the shift can be attributed to the cooler
summer with cooling degree days deceasing 61.7%.
Third Quarter
---------------------------
Electric Margins (000's) 1996 1995
- ------------------------ ---- ----
Revenues $129,482 $130,800
Fuel and purchases 37,531 38,544
------- -------
Margin $ 91,951 $ 92,256
======= =======
Sales in kilowatt-hours (000) 2,901,118 2,859,730
Electric revenues decreased $1.3 million, or 1.0%, during the third
quarter of 1996 as compared to the third quarter of 1995. Residential
-15-
<PAGE>
Kwh sales decreased 5.1% due to cooler weather. Commercial and
industrial Kwh sales rose 3.2% reflecting customer growth. Wholesale
Kwh sales increased 1.8% due to higher demand from WPSC's largest
wholesale customer.
Electric fuels and purchases decreased $1.0 million, or 2.6%, in the
third quarter of 1996 as compared to the same period in 1995. This
decrease occurred even though overall generation was up 2.5%. The
primary reasons for this were a reduction in coal-fired generation
costs, which decreased by 3.5% as a result of two coal transportation
contracts that were renegotiated in the third quarter of 1996, and
lower nuclear generation and nuclear fuel costs which decreased 14.1%
and 5.3%, respectively. Nuclear generation was lower due to the
Kewaunee Nuclear Power Plant ("Kewaunee") being brought down for
maintenance in the third quarter of 1996. In 1995, maintenance
occurred primarily in the second quarter.
GAS OPERATIONS
Gas margins decreased $1.7 million, or 20.9%. The primary reason for
this was a negotiated adjustment to certain gas supply contracts at
WPS Energy Services, Inc. ("ESI"), an energy marketing subsidiary.
Third Quarter
--------------------------
Gas Margins (000's) 1996 1995
- ------------------- ---- ----
Revenues $49,275 $35,948
Purchase costs 42,746 27,694
------ ------
Margin $ 6,529 $ 8,254
====== ======
Volume in therms (000) 184,529 154,089
The Public Service Commission of Wisconsin ("PSCW") allows WPSC to
pass on to its customers, through a purchased gas adjustment clause
("PGAC"), changes in the cost of gas. In the current rate case for
WPSC, the PSCW is looking at the potential of eliminating PGAC.
Gas operating revenues increased $13.3 million, or 37.1%, during the
third quarter of 1996 compared to the third quarter of 1995. This
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<PAGE>
increase was primarily due to sales growth at ESI of 130.4%. This
reflects the acquisition of a gas marketing company in the fourth
quarter of 1995 and higher sales volumes due to customer growth. At
WPSC, revenues were basically unchanged.
Gas purchased for resale showed a net increase of $15.1 million, or
54.4%, in the third quarter of 1996 as compared to the same period in
1995. WPSC gas purchases increased $.5 million, or 2.8%. ESI gas
purchases increased $14.6 million, or 145.7%, as the result of the
acquisition discussed above, customer growth, and higher gas costs.
OTHER
Other operating expenses increased $7.4 million, or 21.5%, in the
third quarter of 1996 as compared to the same period in 1995. Of this
$7.4 million increase, $4.8 million is attributable to WPSC,
$3.0 million of which relates to expansion of its marketing and
customer departments in anticipation of the changing utility
environment. In addition, there was a $2.6 million increase at the
Company's non-utility subsidiaries, ESI and WPS Power Development,
Inc. ("PDI") reflecting the expansion of these businesses and
development of an infrastructure.
Maintenance increased by $1.1 million, or 11.1%, in the third quarter
of 1996 as compared to 1995 due primarily to the shift of the Kewaunee
refueling cycle from 12 months to 18 months. In 1995, the majority of
these costs were incurred in the second quarter.
Income taxes decreased $3.8 million, or 42.8%, in the third quarter of
1996 compared to the same period in 1995, due primarily to lower
earnings.
OVERVIEW OF NINE MONTHS OF 1996 COMPARED TO NINE MONTHS OF 1995
Earnings per share increased from $1.75 in 1995 to $1.84 in 1996, or
5.1%. The primary reason for this was the conversion of Kewaunee to
an 18-month fuel cycle from a 12-month fuel cycle. This will cause
the shift of maintenance and purchased power expenses primarily to the
fourth quarter of 1996. These delayed expenses will impact earnings
at that time. In 1995, Kewaunee refueling-related expenses were
approximately $.11 per share.
-17-
<PAGE>
ELECTRIC OPERATIONS
Electric margins increased by $6.5 million, or 2.5%, due to lower fuel
costs and higher consumption due to the weather and customer growth in
the residential and the commercial and industrial sectors.
Nine Months
--------------------------
Electric Margins (000's) 1996 1995
- ------------------------ ---- ----
Revenues $368,974 $369,318
Fuel and purchases 104,681 111,528
------- -------
Margin $264,293 $257,790
======= =======
Sales in kilowatt-hours (000) 8,311,022 8,287,455
Electric revenues decreased $.3 million, or .1%, during the first nine
months of 1996 compared to the first nine months of 1995. Residential
sales and commercial and industrial sales rose 1.2% and 2.2%,
respectively, due to weather and customer growth. Wholesale Kwh sales
decreased 7.6% due to reduced demand from WPSC's largest wholesale
customer.
Electric fuels and purchases decreased $6.8 million, or 6.1%, in the
first nine months of 1996 compared to the first nine months of 1995.
This decrease was the result of lower purchased power of $6.1 million,
or 18.8%, reflecting 22.6% lower Kwh purchases. Purchased power
requirements were reduced as a result of increased production at
WPSC's coal-fired plants, which had more maintenance in 1995. In
addition, purchased power needs were lower in the first nine months of
1996 with the conversion of Kewaunee to an 18-month fuel cycle.
GAS OPERATIONS
Gas margins increased $2.6 million, or 6.4%, due to the colder than
normal weather.
-18-
<PAGE>
Nine Months
--------------------------
Gas Margins (000's) 1996 1995
- ------------------- ---- ----
Revenues 242,557 $147,294
Purchase costs 199,222 106,567
------- -------
Margin $ 43,335 $ 40,727
======= =======
Volume in therms (000) 838,361 583,654
The PSCW allows WPSC to pass on to its customers, through PGAC,
changes in the cost of gas. In the current rate case for WPSC the
PSCW is looking at the potential of eliminating PGAC.
Gas operating revenues increased $95.3 million, or 64.7%, during the
first nine months of 1996 compared to the same period in 1995. The
$95.3 million increase is comprised of colder than normal weather,
customer growth, and higher gas costs as a result of the weather.
Sales at ESI increased by $69.5 million, or 242.3%. This reflects a
number of factors--the acquisition of a gas marketing company in the
fourth quarter of 1995, higher sales volumes due to customer growth,
colder weather, and higher unit prices due to gas commodity market
conditions. Sales at WPSC increased $25.8 million, or 21.7%, due to
increased gas sales volumes of 9.4% resulting from the colder weather
and the higher cost of gas.
Gas purchased for resale showed a net increase of $92.7 million, or
86.9%, in the first nine months of 1996 as compared to the same period
in 1995. WPSC gas purchases increased $21.7 million due to higher
demand as a result of the weather and higher gas costs, which on
average increased 12.4% per dekatherm. ESI gas purchases increased
$71.0 million as the result of the acquisition discussed above,
customer growth, colder weather, and higher gas costs.
OTHER
Other operating expenses increased $11.6 million, or 10.6%. At WPSC,
there was an increase in gas operating expenses of $1.9 million as a
result of the colder weather and an increase in marketing and
customer-related expenses of approximately $4.4 million. At ESI and
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<PAGE>
PDI there was a $4.6 million increase reflecting the expansion of
these businesses and development of an infrastructure.
Maintenance expense decreased by $5.6 million, or 14.5%, in the first
nine months of 1996 as compared to 1995 due to lower maintenance
activity at WPSC's coal-fired plants and the shift of Kewaunee
maintenance and refueling, which was discussed earlier.
Other income decreased $2.3 million, or 45.1%, in the first nine
months of 1996 as compared to the same period in 1995. The primary
reason for this decrease is $2.1 million of losses recorded at PDI,
which represents PDI's share of start-up operating losses in a paper
recycling mill. PDI is a limited partner in that company.
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 the reduction of short-term borrowings
during the first nine months of 1996. Pretax interest coverage was
4.68 times for the 12 months ended September 30, 1996 for WPSC.
WPSC's bond ratings are AA+ (Standard & Poor's and Duff & Phelps) and
Aa2 (Moody's).
For the three-year period 1996 to 1998, internally generated funds are
expected to lag construction expenditures and other investments
totaling $248 million by about $33 million. These expenditures are
comprised of $140 million for electric construction, $20 million for
nuclear fuel, $35 million for gas construction, $21 million for other
construction expenditures, and $32 million for nuclear decommissioning
and other investments. WPSC currently expects to finance this
shortfall with internally generated funds through short-term debt.
This excludes any expenditures for the replacement of the steam
generator units at Kewaunee and expenditures of WPSR's non-utility
subsidiaries.
In the second quarter of 1996, WPSC repurchased $6.9 million of the
8.80% bond series due in 2021. This repurchase was funded through
short-term borrowings.
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<PAGE>
In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121, Accounting for
the Impairment of Long-Lived Assets and for 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. The
adoption of this new standard did not materially impact the first nine
months of 1996 results based on prior and current rate treatment of
such costs.
However, the PSCW has initiated proceedings to consider restructuring
electric utility regulation in Wisconsin, and one of the issues on its
agenda is stranded investment. Stranded investment is unrecovered
investment in facilities that are no longer economical to operate.
Therefore, the extent and impact of any change in the current
regulatory environment is not known at this time.
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 125, Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities, in June 1996.
This statement provides standards for asset and liability recognition
when transfers occur. This statement, effective January 1, 1997,
removes provisions for recognizing debt defeasements which may have a
material impact on future financial statements in periods where new
debt is issued to replace existing debt and the existing debt has not
yet been extinguished. At the present time, this new standard is not
expected to materially impact the financial statements.
Kewaunee Nuclear Power Plant
(The following information includes forward looking information.)
The Kewaunee Nuclear Power Plant ("Kewaunee") is operated by Wisconsin
Public Service Corporation ("WPSC"), the registrant's wholly-owned
subsidiary. WPSC has a 41.2% ownership interest in Kewaunee.
Kewaunee was taken out of service on September 21, 1996 for a
scheduled refueling and maintenance outage which was originally
projected to be of five weeks duration, that is, Kewaunee was
scheduled to return to service on October 25, 1996. During the
outage, however, electronic inspection of previously sleeved steam
generator tubes disclosed continued degradation of steam generator
tube sleeve joints. There were 907 new indications of corrosion in
____________________
* Paragraphs which include forward looking information are preceded by
an asterisk ("*").
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Steam Generator A and 587 new indications in Steam Generator B which
would require plugging, except for the impact of two technical
specification changes described below. Plugging of these tubes would
result in the aggregate number of effectively plugged Steam
Generator A tubes of approximately 49% of total tubes and the
aggregate number of effectively plugged Steam Generator B tubes of
approximately 34% of total tubes (each steam generator has a total of
3,388 tubes). In each instance, this would exceed the currently
effective 25% average plugging limit for each of the two steam
generators established by the current Kewaunee safety analysis report
and would prevent further operation of Kewaunee unless and until the
tubes are repaired or the two steam generators are replaced. WPSC has
successfully performed the safety analyses necessary to increase the
steam generator effective plugging margin from 25% to 30%.
*As anticipated in the registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1996, the owners of Kewaunee have
submitted requests to the Nuclear Regulatory Commission ("NRC") for
two technical specification changes: (1) The first technical
specification change, which was approved in September 1996, relocates
the sleeve pressure boundary and allows leaving 49 tubes in Steam
Generator A and 40 tubes in Steam Generator B in service; (2) The
second technical specification change, approval of which is still
pending, would allow the laser weld repair of the sleeve joints
thereby allowing the steam generator tubes with the new indications to
remain in service. Although the registrant cannot predict the exact
nature and timing of the NRC's response to the request for the second
technical specification change, the registrant currently expects the
request to be approved by the NRC in mid-November of 1996. It is
estimated that the repair of the steam generators could extend the
outage six to nine weeks beyond the original five week period.
Based on current estimates, Kewaunee could be expected to be returned
to service before the end of the year.
*It is estimated that the total cost of repairing corroded sleeved
tubes utilizing laser welding repair technology would be $3,000,000 to
$5,000,000. The impact on WPSC would be to increase expenses by
$1,236,000 to $2,060,000. The current estimated cost of purchasing
replacement power is in the range of $470,000 more per week than the
cost of Kewaunee generated power. For the remainder of 1996, WPSC's
existing fuel clause window mechanism in the Wisconsin jurisdiction
provides essentially no financial protection for the additional
____________________
* Paragraphs which include forward looking information are preceded by
an asterisk ("*").
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<PAGE>
purchased power costs associated with the extended outage. For 1997,
WPSC is pursuing regulatory approval of one of several alternative
cost recovery mechanisms which would reduce the financial exposure of
either an extended Kewaunee outage or a mid-operating cycle outage to
a greater extent than the existing fuel adjustment mechanism. If one
of the new proposed fuel adjustment mechanisms is not approved, and if
the PSCW decides to retain the existing fuel adjustment mechanism,
WPSC would be able to increase its utility rates prospectively if the
actual total fuel and purchased power costs exceed the forecasted
amounts by more than two percent.
*Prior to the current refueling outage, Kewaunee was operating at 98%
of full rated capacity due to the plugging of tubes. After the
anticipated repairs to be made during this outage, Kewaunee could be
operating at approximately the same 98% level.
The duration of the current Kewaunee outage will depend upon a number
of steam generator repair related factors, including: (1) Whether or
not the NRC will permit the use of the laser welding repair
technology, (2) The length of time it takes the NRC to respond to the
Kewaunee owners' request for use of the laser welding repair
technology, (3) The availability of the necessary welding equipment
and trained personnel to operate the equipment, (4) The number of
tubes to be repaired, (5) The NRC satisfaction that the tubes that
remain unplugged will perform safely during the next operating cycle,
and (6) The tube repair success rate. If for any reason the steam
generators cannot be repaired, the ability of the Kewaunee owners to
reach consensus on steam generator replacement and to secure the
approval of the Public Service Commission of Wisconsin ("PSCW") for
such replacement would become critical factors affecting the duration
of the current outage because in that case replacement of steam
generators would be essential for the continued operation of Kewaunee.
*If the repairs are made using laser welding technology, such repairs
would only be temporary because corrosion would continue at a rate
which cannot be forecasted accurately. Although WPSC believes that
the repairs could extend the useful life of the steam generators for a
period of three or more years, there has been minimal field experience
with this repair technology, and there can be no assurance that such
repairs will be effective or, once effective, remain effective for any
given period of time. In any event, continued long-term operation of
____________________
* Paragraphs which include forward looking information are preceded by
an asterisk ("*").
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<PAGE>
Kewaunee will require replacement of both of the Kewaunee steam
generators.
*If it should become necessary to retire Kewaunee permanently, WPSC
would replace the Kewaunee generation through a combination of power
purchases, increased generation at existing WPSC generating units, and
new generating unit additions, if necessary. Power purchases would be
made from neighboring utilities in Wisconsin and/or the Upper Midwest.
As the industry deregulates, WPSC would monitor the price and
deliverability of purchased power and would accordingly plan for and
solicit bids to build and/or buy new replacement generating capacity
which would provide WPSC the best competitive advantage in the absence
of Kewaunee. The acquisition of new generating capacity would require
prior regulatory approval. In 1997, the PSCW is expected to consider
whether a need exists for the power which would be delivered by an
independent power producer under an agreement signed in November 1995.
*On March 15, 1996, WPSC filed an application with the PSCW for
permission to replace the Kewaunee steam generators in 1999. Review
of this application is pending and the PSCW response cannot be
predicted. In addition, the owners of Kewaunee have differing views
on the desirability of proceeding with the steam generator replacement
project. WPSC is negotiating with the other Kewaunee owners to
resolve this and other ownership issues. As described in the
application filed with the PSCW, WPSC is willing to consider acquiring
full ownership of Kewaunee upon satisfactory resolution of issues
relating to decommissioning costs as well as price and other issues.
The Kewaunee owners have not reached agreement on these matters, but
negotiations are ongoing. If the steam generator replacement project
receives PSCW approval, the issues relating to the future ownership
would still need to be resolved before the steam generator replacement
could proceed. The total capital cost of replacing the two generators
would be approximately $89,000,000 (WPSC's share being $36,668,000) in
year of occurrence dollars from 1996 through 2000 including allowance
for funds use during construction and assuming a fall 1999 steam
generator replacement. WPSC's management believes that it is prudent
to replace the steam generators at the earliest possible date. The
elapsed time from placing a firm steam generator order to receiving
delivery is 22 months.
WPSC has applied to the PSCW for acceleration of the depreciation and
decommissioning collections relative to Kewaunee such that by the end
____________________
* Paragraphs which include forward looking information are preceded by
an asterisk ("*").
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<PAGE>
of the year 2002 there would be full recovery of all existing plant
investment exclusive of that related to the new steam generators, and
there would be funding adequate to fully fund currently forecasted
decommissioning expenditures. With respect to depreciation, WPSC has
requested a special depreciation accrual (over and above the amount
presently being accrued) in the amount of $5,500,000 for each of the
six years 1997 to 2002. With respect to decommissioning, WPSC has
requested an increase in the annual decommissioning fund contribution
of $8,800,000, from $8,4000,000 to $17,200,000. The request for
these accelerations reflects the condition of the present steam
generators and the evolution of the electric generation marketplace
toward a more competitive model. A PSCW decision on the depreciation
and decommissioning applications is expected during the fourth quarter
of 1996.
____________________
* Paragraphs which include forward looking information are preceded by
an asterisk ("*").
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<PAGE>
<PAGE>
Part II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
Kewaunee Nuclear Power Plant
(The following information includes forward looking information.)
The Kewaunee Nuclear Power Plant ("Kewaunee") is operated by Wisconsin
Public Service Corporation ("WPSC"), the registrant's wholly-owned
subsidiary. WPSC has a 41.2% ownership interest in Kewaunee.
Kewaunee was taken out of service on September 21, 1996 for a
scheduled refueling and maintenance outage which was originally
projected to be of five weeks duration, that is, Kewaunee was
scheduled to return to service on October 25, 1996. During the
outage, however, electronic inspection of previously sleeved steam
generator tubes disclosed continued degradation of steam generator
tube sleeve joints. There were 907 new indications of corrosion in
Steam Generator A and 587 new indications in Steam Generator B which
would require plugging, except for the impact of two technical
specification changes described below. Plugging of these tubes would
result in the aggregate number of effectively plugged Steam
Generator A tubes of approximately 49% of total tubes and the
aggregate number of effectively plugged Steam Generator B tubes of
approximately 34% of total tubes (each steam generator has a total of
3,388 tubes). In each instance, this would exceed the currently
effective 25% average plugging limit for each of the two steam
generators established by the current Kewaunee safety analysis report
and would prevent further operation of Kewaunee unless and until the
tubes are repaired or the two steam generators are replaced. WPSC has
successfully performed the safety analyses necessary to increase the
steam generator effective plugging margin from 25% to 30%.
*As anticipated in the registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1996, the owners of Kewaunee have
submitted requests to the Nuclear Regulatory Commission ("NRC") for
two technical specification changes: (1) The first technical
specification change, which was approved in September 1996, relocates
the sleeve pressure boundary and allows leaving 49 tubes in Steam
Generator A and 40 tubes in Steam Generator B in service; (2) The
second technical specification change, approval of which is still
____________________
* Paragraphs which include forward looking information are preceded by
an asterisk ("*").
-26-
<PAGE>
pending, would allow the laser weld repair of the sleeve joints
thereby allowing the steam generator tubes with the new indications to
remain in service. Although the registrant cannot predict the exact
nature and timing of the NRC's response to the request for the second
technical specification change, the registrant currently expects the
request to be approved by the NRC in mid-November of 1996. It is
estimated that the repair of the steam generators could extend the
outage six to nine weeks beyond the original five week period.
Based on current estimates, Kewaunee could be expected to be returned
to service before the end of the year.
*It is estimated that the total cost of repairing corroded sleeved
tubes utilizing laser welding repair technology would be $3,000,000 to
$5,000,000. The impact on WPSC would be to increase expenses by
$1,236,000 to $2,060,000. The current estimated cost of purchasing
replacement power is in the range of $470,000 more per week than the
cost of Kewaunee generated power. For the remainder of 1996, WPSC's
existing fuel clause window mechanism in the Wisconsin jurisdiction
provides essentially no financial protection for the additional
purchased power costs associated with the extended outage. For 1997,
WPSC is pursuing regulatory approval of one of several alternative
cost recovery mechanisms which would reduce the financial exposure of
either an extended Kewaunee outage or a mid-operating cycle outage to
a greater extent than the existing fuel adjustment mechanism. If one
of the new proposed fuel adjustment mechanisms is not approved, and if
the PSCW decides to retain the existing fuel adjustment mechanism,
WPSC would be able to increase its utility rates prospectively if the
actual total fuel and purchased power costs exceed the forecasted
amounts by more than two percent.
*Prior to the current refueling outage, Kewaunee was operating at 98%
of full rated capacity due to the plugging of tubes. After the
anticipated repairs to be made during this outage, Kewaunee could be
operating at approximately the same 98% level.
The duration of the current Kewaunee outage will depend upon a number
of steam generator repair related factors, including: (1) Whether or
not the NRC will permit the use of the laser welding repair
technology, (2) The length of time it takes the NRC to respond to the
Kewaunee owners' request for use of the laser welding repair
technology, (3) The availability of the necessary welding equipment
and trained personnel to operate the equipment, (4) The number of
____________________
* Paragraphs which include forward looking information are preceded by
an asterisk ("*").
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<PAGE>
tubes to be repaired, (5) The NRC satisfaction that the tubes that
remain unplugged will perform safely during the next operating cycle,
and (6) The tube repair success rate. If for any reason the steam
generators cannot be repaired, the ability of the Kewaunee owners to
reach consensus on steam generator replacement and to secure the
approval of the Public Service Commission of Wisconsin ("PSCW") for
such replacement would become critical factors affecting the duration
of the current outage because in that case replacement of steam
generators would be essential for the continued operation of Kewaunee.
*If the repairs are made using laser welding technology, such repairs
would only be temporary because corrosion would continue at a rate
which cannot be forecasted accurately. Although WPSC believes that
the repairs could extend the useful life of the steam generators for a
period of three or more years, there has been minimal field experience
with this repair technology, and there can be no assurance that such
repairs will be effective or, once effective, remain effective for any
given period of time. In any event, continued long-term operation of
Kewaunee will require replacement of both of the Kewaunee steam
generators.
*If it should become necessary to retire Kewaunee permanently, WPSC
would replace the Kewaunee generation through a combination of power
purchases, increased generation at existing WPSC generating units, and
new generating unit additions, if necessary. Power purchases would be
made from neighboring utilities in Wisconsin and/or the Upper Midwest.
As the industry deregulates, WPSC would monitor the price and
deliverability of purchased power and would accordingly plan for and
solicit bids to build and/or buy new replacement generating capacity
which would provide WPSC the best competitive advantage in the absence
of Kewaunee. The acquisition of new generating capacity would require
prior regulatory approval. In 1997, the PSCW is expected to consider
whether a need exists for the power which would be delivered by an
independent power producer under an agreement signed in November 1995.
*On March 15, 1996, WPSC filed an application with the PSCW for
permission to replace the Kewaunee steam generators in 1999. Review
of this application is pending and the PSCW response cannot be
predicted. In addition, the owners of Kewaunee have differing views
on the desirability of proceeding with the steam generator replacement
project. WPSC is negotiating with the other Kewaunee owners to
resolve this and other ownership issues. As described in the
____________________
* Paragraphs which include forward looking information are preceded by
an asterisk ("*").
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<PAGE>
application filed with the PSCW, WPSC is willing to consider acquiring
full ownership of Kewaunee upon satisfactory resolution of issues
relating to decommissioning costs as well as price and other issues.
The Kewaunee owners have not reached agreement on these matters, but
negotiations are ongoing. If the steam generator replacement project
receives PSCW approval, the issues relating to the future ownership
would still need to be resolved before the steam generator replacement
could proceed. The total capital cost of replacing the two generators
would be approximately $89,000,000 (WPSC's share being $36,668,000) in
year of occurrence dollars from 1996 through 2000 including allowance
for funds use during construction and assuming a fall 1999 steam
generator replacement. WPSC's management believes that it is prudent
to replace the steam generators at the earliest possible date. The
elapsed time from placing a firm steam generator order to receiving
delivery is 22 months.
WPSC has applied to the PSCW for acceleration of the depreciation and
decommissioning collections relative to Kewaunee such that by the end
of the year 2002 there would be full recovery of all existing plant
investment exclusive of that related to the new steam generators, and
there would be funding adequate to fully fund currently forecasted
decommissioning expenditures. With respect to depreciation, WPSC has
requested a special depreciation accrual (over and above the amount
presently being accrued) in the amount of $5,500,000 for each of the
six years 1997 to 2002. With respect to decommissioning, WPSC has
requested an increase in the annual decommissioning fund contribution
of $8,800,000, from $8,4000,000 to $17,200,000. The request for
these accelerations reflects the condition of the present steam
generators and the evolution of the electric generation marketplace
toward a more competitive model. A PSCW decision on the depreciation
and decommissioning applications is expected during the fourth quarter
of 1996.
____________________
* Paragraphs which include forward looking information are preceded by
an asterisk ("*").
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<PAGE>
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
The following documents are filed herewith:
Exhibit 3(ii) By-laws
WPS Resources Corporation
Wisconsin Public Service Corporation
Exhibit 11 Statement Regarding Computation of Per
Share Earnings
WPS Resources Corporation
Exhibit 27 Financial Data Schedule
WPS Resources Corporation
Wisconsin Public Service Corporation
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<PAGE>
<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: October 25, 1996 /s/ D. L. Ford
________________________________
D. L. Ford
Controller
(Duly Authorized Officer and
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: October 25, 1996 /s/ D. L. Ford
________________________________
D. L. Ford
Controller
(Duly Authorized Officer and
Chief Accounting Officer)
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<PAGE>
<PAGE>
WPS RESOURCES CORPORATION AND
WISCONSIN PUBLIC SERVICE CORPORATION
EXHIBIT INDEX TO FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1996
Exhibit No. Description
___________ ___________
3(ii) By-laws
WPS Resources Corporation
Wisconsin Public Service Corporation
11 Statement Regarding Computation of Per Share Earnings
WPS Resources Corporation
27 Financial Data Schedule
WPS Resources Corporation
Wisconsin Public Service Corporation
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EXHIBIT 3(ii)
WPS RESOURCES CORPORATION
BY-LAWS
As in Effect July 11, 1996
ARTICLE I. OFFICES
1. PRINCIPAL OFFICE
The principal office of the Corporation in the State of
Wisconsin shall be in the City of Green Bay. The
Corporation may also have offices at such other places,
within and outside of the State of Wisconsin, as the Board
of Directors may designate or as the business of the
Corporation may require.
2. REGISTERED OFFICE
The Board of Directors shall designate the registered office
of the Corporation and may change such registered office by
resolution.
ARTICLE II. SHAREHOLDERS
1. ANNUAL MEETING
The annual meeting of the shareholders for the election of
directors and for the transaction of such other business as
may properly be brought before the meeting shall be held
each year not later than the fourth Tuesday in May, on the
date designated by the Board of Directors and specified in
the notice of meeting. If the election of directors shall
not be held on the day designated for any annual meeting of
the shareholders, or at any adjournment thereof, the Board
of Directors shall cause the election to be held at a
special meeting of the shareholders as soon thereafter as
convenient.
2. SPECIAL MEETINGS
Special meetings of the shareholders may be called by the
Chairman of the Board of Directors or the President or the
Secretary, or by resolution of the Board of Directors. The
Corporation shall call a special meeting of shareholders in
the event that the holders of at least 10% of all the votes
entitled to be cast on any issue proposed to be considered
at the proposed special meeting sign, date, and deliver to
the Corporation one or more written demands for the meeting
describing one or more purposes for which it is to be held.
The Corporation shall
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give notice of such a special meeting within 30 days after
the date that the demand is delivered to the Corporation.
3. PLACE OF MEETING
Each meeting of shareholders, annual or special, shall be
held at the principal office of the Corporation unless
another place, either within or without the State of
Wisconsin, has been designated by the Board of Directors and
specified in the notice of such meeting, but any meeting of
shareholders may be adjourned to reconvene at any place
designated by a majority of the shares represented at such
meeting.
4. NOTICE OF MEETINGS
Written notice stating the date, time, and place of the
meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered
not less than 10 nor more than 60 days before the date of
the meeting (unless a different time is provided by the
Wisconsin Business Corporation Law or the Articles of
Incorporation) to each shareholder of record entitled to
vote at such meeting and to such other persons as required
by the Wisconsin Business Corporation Law. Such notice
shall be given by or at the direction of the officer or
persons calling the meeting and shall be deemed to be
delivered when deposited in the United States mail, postage
prepaid, addressed to the shareholder of record at his or
her address as it appears in the records of the Corporation.
If any meeting of the shareholders is adjourned to another
time or place, no notice of such adjourned meeting need be
given other than by announcement thereof at the meeting at
which such adjournment is taken; provided, however, that if
a new record date for an adjourned meeting is or must be
fixed, the Corporation shall give notice of the adjourned
meeting to persons who are shareholders as of the new record
date.
5. WAIVER OF NOTICE
A shareholder may waive any notice required by the Wisconsin
Business Corporation Law, the Articles of Incorporation or
these By-laws before or after the date and time stated in
the notice. The waiver shall be in writing and signed by
the shareholder entitled to the notice, contain the same
information that would have been required in the notice
under applicable provisions of the Wisconsin Business
Corporation Law (except that the time and place of meeting
need not
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be stated) and be delivered to the Corporation for
inclusion in the corporate records. A shareholder's
attendance at a meeting, in person or by proxy, waives
objection to all of the following:
a. Lack of notice or defective notice of the meeting,
unless the shareholder at the beginning of the meeting
or promptly upon arrival objects to holding the meeting
or transacting business at the meeting; and
b. Consideration of a particular matter at the meeting
that is not within the purpose described in the meeting
notice, unless the shareholder objects to considering
the matter when it is presented.
6. FIXING OF RECORD DATE
The Board of Directors may fix in advance a date as the
record date for the purpose of determining shareholders
entitled to notice of and to vote at any meeting of
shareholders, shareholders entitled to demand a special
meeting as contemplated by Section 2 of this Article II,
shareholders entitled to take any other action, or
shareholders for any other purpose. Such record date shall
not be more than 70 days prior to the date on which the
particular action, requiring such determination of
shareholders, is to be taken. If no record date is fixed by
the Board of Directors or by the Wisconsin Business Corpor-
ation Law for the determination of shareholders entitled to
notice of and to vote at a meeting of shareholders, the
record date shall be the close of business on the day before
the first notice is given to shareholders. If no record
date is fixed by the Board of Directors or by the Wisconsin
Business Corporation Law for the determination of
shareholders entitled to demand a special meeting as
contemplated in Section 2 of this Article II, the record
date shall be the date that the first shareholder signs the
demand. Except as provided by the Wisconsin Business
Corporation Law for a court-ordered adjournment, a
determination of shareholders entitled to notice of and to
vote at a meeting of shareholders is effective for any
adjournment of such meeting unless the Board of Directors
fixes a new record date, which it shall do if the meeting is
adjourned to a date more than 120 days after the date fixed
for the original meeting. The record date for determining
shareholders entitled to a distribution (other than a
distribution involving a purchase, redemption, or other
acquisition of the Corporation's shares) or a share dividend
is the date on which the Board of Directors authorized the
distribution or share dividend, as the case may be, unless
the Board of Directors fixes a different record date.
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7. SHAREHOLDERS' LIST FOR MEETINGS
After a record date for a special or annual meeting of
shareholders has been fixed, the Corporation shall prepare a
list of the names of all of the shareholders entitled to
notice of the meeting. The list shall be arranged by class
or series of shares, if any, and show the address of and
number of shares held by each shareholder. Such list shall
be available for inspection by any shareholder, beginning
two business days after notice of the meeting is given for
which the list was prepared and continuing to the date of
the meeting, at the Corporation's principal office or at a
place identified in the meeting notice in the city where the
meeting will be held. A shareholder or his or her agent
may, on written demand, inspect and, subject to the
limitations imposed by the Wisconsin Business Corporation
Law, copy the list, during regular business hours and at his
or her expense, during the period that it is available for
inspection pursuant to this Section. The Corporation shall
make the shareholders' list available at the meeting and any
shareholder or his or her agent or attorney may inspect the
list at any time during the meeting or any adjournment
thereof. Refusal or failure to prepare or make available
the shareholders' list shall not affect the validity of any
action taken at a meeting of shareholders.
8. QUORUM AND VOTING REQUIREMENTS
Shares entitled to vote as a separate voting group may take
action on a matter at a meeting only if a quorum of those
shares exists with respect to that matter. The holders of
a majority of the shares entitled to vote, represented in
person or by proxy, shall constitute a quorum at a meeting
of shareholders. Once a share is represented for any
purpose at a meeting, other than for the purpose of
objecting to holding the meeting or transacting business at
the meeting, it is considered present for purposes of
determining whether a quorum exists for the remainder of the
meeting and for any adjournment of that meeting unless a new
record date is or must be set for the adjourned meeting. If
a quorum exists, except in the case of the election of
directors, action on a matter shall be approved if the votes
cast within the voting group favoring the action exceed the
votes cast opposing the action, unless the Articles of
Incorporation or the Wisconsin Business Corporation Law
requires a greater number of affirmative votes. Unless
otherwise provided in the Articles of Incorporation, each
director shall be elected by a plurality of the votes cast
by the shares entitled to vote in the election of directors
at a meeting at which a quorum is present. Though less than
a quorum of the outstanding votes of a voting group are
represented at a meeting, a majority of the votes so
represented may adjourn the meeting from time to time
without further notice. At such adjourned meeting at which
a
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quorum shall be present or represented, any business may
be transacted which might have been transacted at the
meeting as originally notified.
9. PROXIES
At all meetings of shareholders, a shareholder may vote his
or her shares in person or by proxy. A shareholder may
appoint a proxy to vote or otherwise act for the shareholder
by signing an appointment form, either personally or by his
or her attorney-in-fact. An appointment of a proxy is
effective when received by the Secretary or other officer or
agent of the Corporation authorized to tabulate votes. An
appointment is valid for 11 months from the date of its
signing unless a different period is expressly provided in
the appointment form.
10. ACCEPTANCE OF INSTRUMENTS SHOWING SHAREHOLDER ACTION
If the name signed on a vote, consent, waiver, or proxy
appointment corresponds to the name of a shareholder, the
Corporation, if acting in good faith, may accept the vote,
consent, waiver, or proxy appointment and give it effect as
the act of a shareholder. If the name signed on a vote,
consent, waiver, or proxy appointment does not correspond to
the name of a shareholder, the Corporation, if acting in
good faith, may accept the vote, consent, waiver, or proxy
appointment and give it effect as the act of the shareholder
if any of the following apply:
a. The shareholder is an entity and the name signed
purports to be that of an officer or agent of the
entity.
b. The name purports to be that of a personal
representative, administrator, executor, guardian, or
conservator representing the shareholder and, if the
Corporation requests, evidence of fiduciary status
acceptable to the Corporation is presented with respect
to the vote, consent, waiver, or proxy appointment.
c. The name signed purports to be that of a receiver or
trustee in bankruptcy of the shareholder and, if the
Corporation requests, evidence of this status
acceptable to the Corporation is presented with respect
to the vote, consent, waiver, or proxy appointment.
d. The name signed purports to be that of a pledgee,
beneficial owner, or attorney-in-fact of the share-
holder and, if the Corporation requests, evidence
acceptable to the Corporation of the signatory's
authority to sign
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for the shareholder is presented with respect to the
vote, consent, waiver, or proxy appointment.
e. Two or more persons are the shareholders as co-tenants
or fiduciaries and the name signed purports to be the
name of at least one of the co-owners and the person
signing appears to be acting on behalf of all
co-owners.
The Corporation may reject a vote, consent, waiver, or proxy
appointment if the Secretary or other officer or agent of
the Corporation who is authorized to tabulate votes, acting
in good faith, has reasonable basis for doubt about the
validity of the signature on it or about the signatory's
authority to sign for the shareholder.
ARTICLE III. BOARD OF DIRECTORS
1. GENERAL POWERS
The business and affairs of the Corporation shall be managed
by its Board of Directors. The Board shall determine the
nature and character of the business to be conducted by the
Corporation and the method of doing so; what employees,
agents, and officers shall be employed and their
compensation; and what purchases or contracts for purchase
shall be made. The Board may delegate any of its aforesaid
powers to committees or to officers, agents, or employees as
it may from time to time determine.
2. NUMBER OF DIRECTORS
The number of directors of the Corporation shall be nine,
divided into three classes of three directors each (Class A,
Class B, and Class C).
3. TERM
At the 1994 annual meeting of shareholders, the directors of
Class A shall be elected for a term to expire at the first
annual meeting of shareholders after their election, and
until their successors are elected and qualify, the
directors of Class B shall be elected for a term to expire
at the second annual meeting of shareholders after their
election, and until their successors are elected and
qualify, and the directors of Class C shall be elected for a
term to expire at the third annual meeting of shareholders
after their election and until their successors are elected
and qualify. At each annual meeting of shareholders
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after the 1994 annual meeting of shareholders, the
successors to the class of directors whose terms shall
expire at the time of such annual meeting shall be
elected to hold office until the third succeeding annual
meeting of shareholders, and until their successors are
elected and qualify.
4. QUALIFICATIONS
No director shall be eligible for re-election after
attaining the age of 70 years. Directors need not be
shareholders of the Corporation or residents of the State of
Wisconsin.
5. MEETINGS
The Board of Directors shall hold its meetings at such place
or places, within or without the State of Wisconsin, as the
Board may from time to time determine.
a. A meeting of the Board of Directors, to be known as the
annual meeting, may be held, without notice,
immediately after and at the same place as the annual
meeting of the shareholders at which such Board is
elected, for the purpose of electing the officers of
the Corporation and to transact such other business as
may come before the Board. Such annual meeting may be
held at a different place than the annual meeting of
shareholders and/or on a date subsequent to the annual
meeting of shareholders, if notice of such different
place and/or date has been given to or waived by all
the directors.
b. Regular meetings of the Board of Directors may be held
without call and without notice, at such times and in
such places as the Board may by resolution from time to
time determine.
c. Special meetings of the Board of Directors may be
called at any time by the Chairman of the Board or the
Chief Executive Officer and shall be called by the
Secretary of the Corporation upon the written request
of three or more directors.
6. NOTICE; WAIVER
Notice of each special meeting of the Board of Directors
shall be given by written notice delivered or communicated
in person, by telegraph, teletype, facsimile or other form
of wire or wireless communication, or by mail or private
carrier, to each director at his or her business address or
at such other address as such director shall have designated
in writing filed with the Secretary, in each case not
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less than 48 hours prior to the meeting. The notice need
not prescribe the purpose of the special meeting of the
Board of Directors or the business to be transacted at such
meeting. If mailed, such notice shall be deemed to be
effective when deposited in the United States mail so
addressed, with postage thereon prepaid. If notice is
given by telegram, such notice shall be deemed to be
effective when the telegram is delivered to the telegraph
company. If notice is given by private carrier, such
notice shall be deemed to be effective when delivered
to the private carrier. Whenever any notice whatever is
required to be given to any director of the Corporation
under the Articles of Incorporation or these By-laws or
any provision of the Wisconsin Business Corporation Law,
a waiver thereof in writing, signed at any time, whether
before or after the date and time of meeting, by the
director entitled to such notice shall be deemed
equivalent to the giving of such notice. The Corporation
shall retain any such waiver as part of the permanent
corporate records. A director's attendance at or
participation in a meeting waives any required notice to
him or her of the meeting unless the director at the
beginning of the meeting or promptly upon his or her
arrival objects to holding the meeting or transacting
business at the meeting and does not thereafter vote
for or assent to action taken at the meeting.
7. QUORUM
Except as otherwise provided by the Wisconsin Business
Corporation Law or by the Articles of Incorporation or these
By-laws, a majority of the number of directors specified in
Section 2 of Article III of these By-laws shall constitute a
quorum for the transaction of business at any meeting of the
Board of Directors. Except as otherwise provided by the
Wisconsin Business Corporation Law, the Articles of
Incorporation, or these By-laws, a quorum of any committee
of the Board of Directors created pursuant to Section 13
hereof shall consist of a majority of the number of
directors appointed to serve on the committee. A majority
of the directors present (though less than such quorum) may
adjourn any meeting of the Board of Directors or any
committee thereof, as the case may be, from time to time
without further notice.
8. MANNER OF ACTING
The affirmative vote of a majority of the directors present
at a meeting of the Board of Directors or a committee
thereof at which a quorum is present shall be the act of the
Board of Directors or such committee, as the case may be,
unless the Wisconsin Business Corporation Law, the Articles
of Incorporation, or these By-laws require the vote of a
greater number of directors.
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9. MINUTES OF MEETINGS
Minutes of any regular or special meeting of the Board of
Directors shall be prepared and distributed to each
director.
10. VACANCIES
Vacancies occurring in the Board of Directors shall be
filled in the manner provided in Article 5 of the Articles
of Incorporation.
11. COMPENSATION
The Board of Directors, irrespective of any personal
interest of any of its members, may establish reasonable
compensation of all directors for services to the
Corporation as directors, officers, or otherwise, or may
delegate such authority to an appropriate committee. The
Board of Directors also shall have authority to provide for
or delegate authority to an appropriate committee to provide
for reasonable pensions, disability or death benefits, and
other benefits or payments, to directors, officers, and
employees and to their estates, families, dependents, or
beneficiaries on account of prior services rendered by such
directors, officers, and employees to the Corporation.
12. PRESUMPTION OF ASSENT
A director who is present and is announced as present at a
meeting of the Board of Directors or any committee thereof
created in accordance with Section 13 of this Article III,
when corporate action is taken, assents to the action taken
unless any of the following occurs:
a. The director objects at the beginning of the meeting or
promptly upon his or her arrival to holding the meeting
or transacting business at the meeting;
b. The director's dissent or abstention from the action
taken is entered in the minutes of the meeting; or
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c. The director delivers written notice that complies with
the Wisconsin Business Corporation Law of his or her
dissent or abstention to the presiding officer of the
meeting before its adjournment or to the Corporation
immediately after adjournment of the meeting.
Such right of dissent or abstention shall not apply to a
director who votes in favor of the action taken.
13. COMMITTEES
The Board of Directors by resolution adopted by the
affirmative vote of a majority of all of the directors then
in office may create one or more committees, appoint members
of the Board of Directors to serve on the committees and
designate other members of the Board of Directors to serve
as alternates. Each committee shall have two or more
members who shall, unless otherwise provided by the Board of
Directors, serve at the pleasure of the Board of Directors.
A committee may be authorized to exercise the authority of
the Board of Directors, except that a committee may not do
any of the following:
a. Authorize distributions;
b. Approve or propose to shareholders action that the
Wisconsin Business Corporation Law requires to be
approved by shareholders;
c. Fill vacancies on the Board of Directors or, unless the
Board of Directors provides by resolution that
vacancies on a committee shall be filled by the affirm-
ative vote of the remaining committee members, on any
Board committee;
d. Amend the Corporation's Articles of Incorporation;
e. Adopt, amend, or repeal By-laws;
f. Approve a plan of merger not requiring shareholder
approval;
g. Authorize or approve reacquisition of shares, except
according to a formula or method prescribed by the
Board of Directors; and
h. Authorize or approve the issuance or sale or contract
for sale of shares, or determine the designation and
relative rights, preferences and limitations of a class
or series of shares, except that the Board of Directors
may authorize a committee to do so within limits
prescribed by the Board of
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Directors. Unless otherwise provided by the Board of
Directors in creating the committee, a committee may
employ counsel, accountants, and other consultants to
assist it in the exercise of its authority.
14. TELEPHONIC MEETINGS
Except as herein provided and notwithstanding any place set
forth in the notice of the meeting or these By-laws, members
of the Board of Directors (and any committees thereof
created pursuant to Section 13 of this Article III) may
participate in regular or special meetings by, or through
the use of, any means of communication by which all
participants may simultaneously hear each other, such as by
conference telephone. If a meeting is conducted by such
means, then at the commencement of such meeting the
presiding officer shall inform the participating directors
that a meeting is taking place at which official business
may be transacted. Any participant in a meeting by such
means shall be deemed present in person at such meeting.
Notwithstanding the foregoing, no action may be taken at any
meeting held by such means on any particular matter which
the presiding officer determines, in his or her sole
discretion, to be inappropriate under the circumstances for
action at a meeting held by such means. Such determination
shall be made and announced in advance of such meeting.
15. ACTION WITHOUT MEETING
Any action required or permitted by the Wisconsin Business
Corporation Law to be taken at a meeting of the Board of
Directors or a committee thereof created pursuant to
Section 13 of this Article III may be taken without a
meeting if the action is taken by all members of the Board
or of the committee. The action shall be evidenced by one
or more written consents describing the action taken, signed
by each director or committee member, and retained by the
Corporation. Such action shall be effective when the last
director or committee member signs the consent, unless the
consent specifies a different effective date.
ARTICLE IV. OFFICERS
1. PRINCIPAL OFFICERS
The principal officers of the Corporation required by
statute shall be a President, such number of Vice Presidents
as may be elected by the Board of Directors, a Secretary,
and a Treasurer. The Board of Directors may elect from
among the directors a Chairman of the Board of Directors and
a Vice Chairman of the Board
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of Directors, may designate such Chairman, Vice Chairman,
or any principal officer as the Chief Executive Officer,
may elect such assistant secretaries and assistant
treasurers and other officers as it shall deem necessary,
and may prescribe by resolution their respective powers
and duties.
2. PRESIDENT
The President shall be elected by the directors. Unless the
Board of Directors otherwise prescribes, he or she shall be
the Chief Executive Officer of the Corporation. In the
event that the President is not the Chief Executive Officer,
he or she shall have such powers and duties as the Board of
Directors may prescribe.
3. CHAIRMAN OF THE BOARD OF DIRECTORS
If a Chairman of the Board of Directors shall be elected, he
or she shall preside as Chairman of all meetings of the
shareholders and of the Board of Directors. He or she shall
have such other authority as the Board may from time to time
prescribe. If there is no Chairman of the Board, or in the
absence of the Chairman, the presiding officer at meetings
of the shareholders, and of the Board of Directors shall be
another officer in the following order of priority:
Vice Chairman of the Board of Directors, President and Vice
Presidents (subject, however, to Section 5 of this Article).
4. CHIEF EXECUTIVE OFFICER
The Chief Executive Officer shall exercise active
supervision over the business, property, and affairs of the
Corporation.
a. The Chief Executive Officer shall have authority,
subject to such rules as may be prescribed from time to
time by the Board or its committees, to appoint agents
or employees other than those elected by the Board, to
prescribe their powers and duties, and to delegate such
authority as he or she may see fit. Any agent or
employee not elected by the Board shall hold office at
the discretion of the Chief Executive Officer or other
officer employing him.
b. The Chief Executive Officer is authorized to sign,
execute, and acknowledge, on behalf of the Corporation,
all deeds, mortgages, bonds, notes, debentures,
contracts, leases, reports and other documents and
instruments, except where the signing and execution
thereof by some other officer or agent shall be
expressly authorized and directed by law or
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by the Board or by these By-laws. Unless otherwise
provided by law or by the Board, the Chief Executive
Officer may authorize any officer, employee, or agent
to sign, execute, and acknowledge, on behalf of the
Corporation, and in his or her place and stead, all
such documents and instruments.
c. Unless otherwise ordered by the Board of Directors, the
Chief Executive Officer, or a proxy appointed by him,
shall have full power and authority, in the name of and
on behalf of the Corporation, to attend, act, and vote
at any meeting of the shareholders of any other
corporation in which the Corporation may hold shares of
stock. At any such meeting, he or she shall possess
and may exercise any and all rights and powers incident
to the ownership of shares of stock.
d. The Chief Executive Officer shall have such other
powers and perform such other duties as are incident to
the office of Chief Executive Officer and as may be
prescribed by the Board.
5. VICE PRESIDENTS
In the absence of the President or during his or her
inability or refusal to act, his or her powers and duties
shall temporarily devolve upon such Vice Presidents or other
officers as shall be designated by the Board of Directors
or, if not designated by the Board, by the Chief Executive
Officer or other officer to whom such power may be delegated
by the Board; provided, that no Vice President or other
officer shall act as a member or chairman of any committee
of the Board of Directors of which the President is a member
or chairman, except at the direction of the Board.
a. Each Vice President shall have such powers and perform
such other duties as may be assigned to him by the
Board or by the President, including the power to sign,
execute, and acknowledge all documents and instruments
referred to in Section 4 of this Article.
b. The Board may assign to any Vice President, general
supervision and charge over any branch of the business
and affairs of the Corporation, subject to such
limitations as it may elect to impose.
c. The Board of Directors may, if it chooses, designate
one or more of the Vice Presidents "Executive Vice
President" with such powers and duties as the Board
shall prescribe.
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6. SECRETARY
The Secretary shall attend, and keep the minutes of meetings
of the shareholders, of the Board of Directors and, unless
otherwise directed by any such committee, of all committees,
in books provided for that purpose; shall have custody of
the corporate records and seal; shall see that notices are
given and records and reports properly kept and filed as
required by law or by these By-laws; and, in general, shall
have such other powers and perform such other duties as are
incident to the office of Secretary and as may be assigned
to him or her by the Board of Directors or the Chief
Executive Officer.
7. ASSISTANT SECRETARIES
In the absence of the Secretary, or during his or her
inability or refusal to act, his or her powers and duties
shall temporarily devolve upon such one of the Assistant
Secretaries as the President or the Board of Directors may
direct. The Assistant Secretaries shall have such other
powers and perform such other duties as may be assigned to
them by the Board, the Chief Executive Officer, or the
Secretary.
8. TREASURER
The Treasurer shall have charge and custody of the funds,
securities, and other evidences of value of the Corporation,
and shall keep and deposit them as required by the Board of
Directors. He or she shall keep proper accounts of all
receipts and disbursements and of the financial transactions
of the Corporation. He or she shall render statements of
such accounts and of money received and disbursed by him or
her and of property and money belonging to the Corporation
as required by the Board. The Treasurer shall have such
other powers and perform such other duties as are incident
to the office of Treasurer and as from time to time may be
prescribed by the Board or the Chief Executive Officer.
9. ASSISTANT TREASURERS
In the absence of the Treasurer, or during his or her
inability or refusal to act, his or her powers and duties
shall temporarily devolve upon such one of the Assistant
Treasurers as the President or the Board of Directors may
direct. The Assistant Treasurers shall have such other
powers and perform such other duties as from time to time
may be assigned to them, respectively, by the Board, the
Chief Executive Officer, or the Treasurer.
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10. OTHER ASSISTANTS AND ACTING OFFICERS
The Board of Directors shall have the power to appoint any
person to act as assistant to any officer, or as agent for
the Corporation in his or her stead, or to perform the
duties of such officer whenever for any reason it is
impracticable for such officer to act personally, and such
assistant or acting officer or other agent so appointed by
the Board of Directors or an authorized officer shall have
the power to perform all the duties of the office to which
he or she is so appointed to be an assistant, or as to which
he or she is so appointed to act, except as such power may
be otherwise defined or restricted by the Board of
Directors.
11. COMPENSATION
The salaries or other compensation of all officers elected
as provided under Section 1 of this Article (other than
assistant officers) shall be fixed from time to time by the
Board of Directors. The salaries or other compensation of
all other agents and employees of the Corporation shall be
fixed from time to time by the Chief Executive Officer, but
only within such limits as to amount, and in accordance with
such other conditions as may be prescribed by or under the
authority of the Board of Directors.
12. TENURE
Each officer shall hold office until his or her successor
shall have been duly elected and qualified, or until his or
her death, resignation, disqualification, or removal. Any
officer, agent, or employee may be removed, with or without
cause, at any time by the Board of Directors notwithstanding
the contract rights, if any, of the officer removed. The
appointment of an officer does not of itself create contract
rights.
13. RESIGNATION
An officer may resign at any time by delivering notice to
the Corporation that complies with the Wisconsin Business
Corporation Law. The resignation shall be effective when
the notice is delivered, unless the notice specifies a later
effective date and the Corporation accepts the later
effective date.
14. VACANCIES
Any vacancy in any office may be filled by the Board of
Directors for the unexpired portion of the term. If a
resignation of an officer is effective at a later date as
contemplated by Section 13 of this Article IV, the Board of
Directors may
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fill the pending vacancy before the effective date if the
Board provides that the successor may not take office
until the effective date.
15. REASSIGNMENT OF DUTIES
In case of the absence or disability of any officer of the
Corporation, or for any other reason deemed sufficient by
the Board of Directors, the Board may reassign or delegate
the powers and duties, or any of them, to any other officer,
director, or person it may select.
ARTICLE V. CERTIFICATES FOR AND TRANSFER OF SHARES
1. FORM
Certificates representing shares of the Corporation shall be
in such form as shall be determined by the Board of
Directors. All certificates for shares shall be
consecutively numbered or otherwise identified. The name
and address of the person to whom the shares represented
thereby are issued, with the number of shares and date of
issue, shall be entered on the stock transfer books of the
Corporation. All certificates surrendered for the transfer
shall be cancelled and no new certificate shall be issued
until the former certificate for a like number of shares
shall have been surrendered and cancelled, except in case of
a lost or destroyed certificate provided for in Section 4 of
this Article V or a certificate for shares transferred in
compliance with the escheat laws of any state.
2. SIGNATURES
Certificates representing shares of the Corporation shall be
signed by the President or a Vice President and by the
Secretary or an Assistant Secretary; and may be sealed with
the seal of the Corporation (which may be a facsimile) and
countersigned and registered in such manner, if any, as the
Board of Directors may prescribe. Whenever any certificate
is manually signed on behalf of a transfer agent, or a
registrar, other than the Corporation itself or an employee
of the Corporation, the signatures of the President, Vice
President, Secretary, or Assistant Secretary, upon such
certificate may be facsimiles. In case any officer who has
signed, or whose facsimile signature has been placed upon
such certificate, ceases to be such officer before such
certificate is issued, it may be issued with the same effect
as if he or she were such officer at the date of its issue.
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3. RESTRICTIONS ON TRANSFER
The face or reverse side of each certificate representing
shares shall bear a conspicuous notation of any restriction
imposed by the Corporation upon the transfer of such shares.
4. LOST, DESTROYED, OR STOLEN CERTIFICATES
Where the owner claims that his or her certificate for
shares has been lost, destroyed, or wrongfully taken, a new
certificate shall be issued in place thereof if the owner:
a. So requests before the Corporation has notice that such
shares have been acquired by a bona fide purchaser;
b. Files with the Corporation a sufficient indemnity bond;
and
c. Satisfies such other reasonable requirements as may be
prescribed by or under the authority of the Board of
Directors.
5. TRANSFER OF SHARES
Prior to due presentment of a certificate for shares for
registration of transfer the Corporation may treat the
registered owner of such shares as the person exclusively
entitled to vote, to receive notifications, and otherwise to
have and exercise all the rights and powers of an owner.
Where a certificate for shares is presented to the
Corporation with a request to register for transfer, the
Corporation shall not be liable to the owner or any other
person suffering loss as a result of such registration of
transfer if:
a. There were on or with the certificate the necessary
endorsements; and
b. The Corporation had no duty to inquire into adverse
claims or has discharged any such duty.
The Corporation may require reasonable assurance that said
endorsements are genuine and effective and compliance with
such other regulations as may be prescribed by or under the
authority of the Board of Directors.
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6. CONSIDERATION FOR SHARES
The Board of Directors may authorize shares to be issued for
consideration consisting of any tangible or intangible
property or benefit to the Corporation, including cash,
promissory notes, services performed, contracts for services
to be performed or other securities of the Corporation.
Before the Corporation issues shares, the Board of Directors
shall determine that the consideration received or to be
received for the shares to be issued is adequate. The
determination of the Board of Directors is conclusive
insofar as the adequacy of consideration for the issuance of
shares relates to whether the shares are validly issued,
fully paid, and nonassessable. The Corporation may place in
escrow shares issued in whole or in part for a contract for
future services or benefits, a promissory note, or otherwise
for property to be issued in the future, or make other
arrangements to restrict the transfer of the shares, and may
credit distributions in respect of the shares against their
purchase price, until the services are performed, the
benefits or property are received, or the promissory note is
paid. If the services are not performed, the benefits or
property are not received, or the promissory note is not
paid, the Corporation may cancel, in whole or in part, the
shares escrowed or restricted and the distributions
credited.
7. OTHER RULES
The Board of Directors shall have the power and authority to
make all such further rules and regulations not inconsistent
with the statutes of the State of Wisconsin as it may deem
expedient concerning the issue, transfer, and registration
of certificates representing shares of the Corporation,
including the appointment and designation of Transfer Agents
and Registrars.
ARTICLE VI. INDEMNIFICATION OF OFFICERS AND DIRECTORS
1. MANDATORY INDEMNIFICATION
a. In all cases other than those set forth in Section 1b
hereof, subject to the conditions and limitations set
forth hereinafter in this Article VI, the Corporation
shall indemnify and hold harmless any person who is or
was a party, or is threatened to be made a party, to
any Action (see Section 16 of this Article VI for
definitions of capitalized terms used herein) by reason
of his or her status as an Executive, and/or as to acts
performed in the course of such Executive's duties to
the Corporation and/or an Affiliate, against
Liabilities and reasonable Expenses incurred by or on
behalf of an Executive in connection with any Action,
including, without limitation, in
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connection with the investigation, defense, settlement
or appeal of any Action; provided, pursuant to
Section 3 of this Article VI, that it is not
determined by the Authority, or by a court, that the
Executive engaged in misconduct which constitutes a
Breach of Duty.
b. To the extent an Executive has been successful on the
merits or otherwise in connection with any Action,
including, without limitation, the settlement,
dismissal, abandonment, or withdrawal of any such
Action where the Executive does not pay, incur, or
assume any material Liabilities, or in connection with
any claim, issue, or matter therein, he or she shall be
indemnified by the Corporation against reasonable
Expenses incurred by or on behalf of him or her in
connection therewith. The Corporation shall pay such
Expenses to the Executive (net of all Expenses, if any,
previously advanced to the Executive pursuant to
Section 2 of this Article VI), or to such other person
or entity as the Executive may designate in writing to
the Corporation, within ten days after the receipt of
the Executive's written request therefor, without
regard to the provisions of Section 3 of this
Article VI. In the event the Corporation refuses to
pay such requested Expenses, the Executive may petition
a court to order the Corporation to make such payment
pursuant to Section 4 of this Article VI.
c. Notwithstanding any other provision contained in this
Article VI to the contrary, the Corporation shall not:
(1) Indemnify, contribute, or advance Expenses to an
Executive with respect to any Action initiated or
brought voluntarily by the Executive and not by
way of defense, except with respect to Actions:
(a) brought to establish or enforce a right to
indemnification, contribution, and/or an
advance of Expenses under Section 4 of this
Article VI, under the Statute as it may then
be in effect or under any other statute or
law or otherwise as required;
(b) initiated or brought voluntarily by an
Executive to the extent such Executive is
successful on the merits or otherwise in
connection with such an Action in accordance
with and pursuant to Section 1b of this
Article VI; or
(c) as to which the Board determines it to be
appropriate.
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(2) indemnify the Executive under this Article VI for
any amounts paid in settlement of any Action
effected without the Corporation's written
consent.
The Corporation shall not settle in any manner which
would impose any Liabilities or other type of
limitation on the Executive without the Executive's
written consent. Neither the Corporation nor the
Executive shall unreasonably withhold their consent to
any proposed settlement.
d. An Executive's conduct with respect to an employee
benefit plan sponsored by or otherwise associated with
the Corporation and/or an Affiliate for a purpose he or
she reasonably believes to be in the interests of the
participants in and beneficiaries of such plan is
conduct that does not constitute a breach or failure to
perform his or her duties to the Corporation or an
Affiliate, as the case may be.
2. ADVANCE FOR EXPENSES
a. The Corporation shall pay to an Executive, or to such
other person or entity as the Executive may designate
in writing to the Corporation, his or her reasonable
Expenses incurred by or on behalf of such Executive in
connection with any Action, or claim, issue, or matter
associated with any such Action, in advance of the
final disposition or conclusion of any such Action (or
claim, issue, or matter associated with any such
Action), within ten days after the receipt of the
Executive's written request therefor; provided, the
following conditions are satisfied:
(1) The Executive has first requested an advance of
such Expenses in writing (and delivered a copy of
such request to the Corporation) from the
insurance carrier(s), if any, to whom a claim has
been reported under an applicable insurance policy
purchased by the Corporation and each such
insurance carrier, if any, has declined to make
such an advance;
(2) The Executive furnishes to the Corporation an
executed written certificate affirming his or her
good faith belief that he or she has not engaged
in misconduct which constitutes a Breach of Duty;
and
(3) The Executive furnishes to the Corporation an
executed written agreement to repay any advances
made under this Section 2 if it is ultimately
determined that he or she is not entitled to be
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indemnified by the Corporation for such Expenses
pursuant to this Article VI.
b. If the Corporation makes an advance of Expenses to an
Executive pursuant to this Section 2, the Corporation
shall be subrogated to every right of recovery the
Executive may have against any insurance carrier from
whom the Corporation has purchased insurance for such
purpose.
3. DETERMINATION OF RIGHT TO INDEMNIFICATION
a. Except as otherwise set forth in this Section 3 or in
Section 1c of this Article VI, any indemnification to
be provided to an Executive by the Corporation under
Section 1a of this Article VI upon the final
disposition or conclusion of any Action, or any claim,
issue, or matter associated with any such Action,
unless otherwise ordered by a court, shall be paid by
the Corporation to the Executive (net of all Expenses,
if any, previously advanced to the Executive pursuant
to Section 2 of this Article VI), or to such other
person or entity as the Executive may designate in
writing to the Corporation, within 60 days after the
receipt of the Executive's written request therefor.
Such request shall include an accounting of all amounts
for which indemnification is being sought. No further
corporate authorization for such payment shall be
required other than this Section 3.
b. Notwithstanding the foregoing, the payment of such
requested indemnifiable amounts pursuant to Section 1a
of this Article VI may be denied by the Corporation if:
(1) the Board by a majority vote thereof determines
that the Executive has engaged in misconduct which
constitutes a Breach of Duty; or
(2) a majority of the directors of the Corporation are
a party in interest to such Action.
c. In either event of nonpayment pursuant to Section 3b of
this Article VI, the Board shall immediately authorize
and direct, by resolution, that an independent
determination be made as to whether the Executive has
engaged in misconduct which constitutes a Breach of
Duty and, therefore, whether indemnification of the
Executive is proper pursuant to this Article VI.
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d. Such independent determination shall be made, at the
option of the Executive(s) seeking indemnification, by:
(1) A panel of three arbitrators (selected as set
forth below in Section 3f from the panels of
arbitrators of the American Arbitration
Association) in Milwaukee, Wisconsin, in
accordance with the Commercial Arbitration Rules
then prevailing of the American Arbitration
Association;
(2) An independent legal counsel mutually selected by
the Executive(s) seeking indemnification and the
Board by a majority vote of a quorum thereof
consisting of directors who were not parties in
interest to such Action (or, if such quorum is not
obtainable, by the majority vote of the entire
Board); or
(3) A court in accordance with Section 4 of this
Article VI.
e. In any such determination there shall exist a
rebuttable presumption that the Executive has not
engaged in misconduct which constitutes a Breach of
Duty and is, therefore, entitled to indemnification
hereunder. The burden of rebutting such presumption by
clear and convincing evidence shall be on the
Corporation.
f. If a panel of arbitrators is to be employed hereunder,
one of such arbitrators shall be selected by the Board
by a majority vote of a quorum thereof consisting of
directors who were not parties in interest to such
Action or, if such quorum is not obtainable, by an
independent legal counsel chosen by the majority vote
of the entire Board, the second by the Executive(s)
seeking indemnification, and the third by the previous
two arbitrators.
g. The Authority shall make its independent determination
hereunder within 60 days of being selected and shall
simultaneously submit a written opinion of its con-
clusions to both the Corporation and the Executive.
h. If the Authority determines that an Executive is
entitled to be indemnified for any amounts pursuant to
this Article VI, the Corporation shall pay such amounts
to the Executive (net of all Expenses, if any,
previously advanced to the Executive pursuant to
Section 2 of this Article VI), including interest
thereon as provided in Section 6c of this Article VI,
or such other person or entity as the Executive may
designate in writing to the Corporation, within
ten days of receipt of such opinion.
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i. Except with respect to any judicial determination
pursuant to Section 4 of this Article VI, the Expenses
associated with the indemnification process set forth
in this Section 3 of this Article VI, including,
without limitation, the Expenses of the Authority
selected hereunder, shall be paid by the Corporation.
4. COURT-ORDERED INDEMNIFICATION AND ADVANCE FOR EXPENSES
a. An Executive may, either before or within two years
after a determination, if any, has been made by the
Authority, petition the court before which such Action
was brought or any other court of competent
jurisdiction to independently determine whether or not
he or she has engaged in misconduct which constitutes a
Breach of Duty and is, therefore, entitled to
indemnification under the provisions of this
Article VI. Such court shall thereupon have the
exclusive authority to make such determination unless
and until such court dismisses or otherwise terminates
such proceeding without having made such determination.
An Executive may petition a court under this Section 4
either to seek an initial determination by the court as
authorized by Section 3d of this Article VI or to seek
review by the court of a previous adverse determination
by the Authority.
b. The court shall make its independent determination
irrespective of any prior determination made by the
Authority; provided, however, that there shall exist a
rebuttable presumption that the Executive has not
engaged in misconduct which constitutes a Breach of
Duty and is, therefore, entitled to indemnification
hereunder. The burden of rebutting such presumption by
clear and convincing evidence shall be on the
Corporation.
c. In the event the court determines that an Executive has
engaged in misconduct which constitutes a Breach of
Duty, it may nonetheless order indemnification to be
paid by the Corporation if it determines that the
Executive is fairly and reasonably entitled to
indemnification in view of all of the circumstances of
such Action.
d. In the event the Corporation does not:
(1) Advance Expenses to the Executive within ten days
of such Executive's compliance with Section 2 of
this Article VI; or
(2) Indemnify an Executive with respect to requested
Expenses under Section 1b of this Article VI
within ten days of such Executive's written
request therefor, the Executive may petition the
court before
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which such Action was brought, if any, or any
other court of competent jurisdiction to order
the Corporation to pay such reasonable Expenses
immediately. Such court, after giving any
notice it considers necessary, shall order the
Corporation to pay such Expenses if it determines
that the Executive has complied with the
applicable provisions of Section 2 of this
Article VI or 1b of this Article VI, as the case
may be.
e. If the court determines pursuant to this Section 4 that
the Executive is entitled to be indemnified for any
Liabilities and/or Expenses, or to the advance of
Expenses, unless otherwise ordered by such court, the
Corporation shall pay such Liabilities and/or Expenses
to the Executive (net of all Expenses, if any,
previously advanced to the Executive pursuant to
Section 2 of this Article VI), including interest
thereon as provided in Section 6c of this Article VI,
or to such other person or entity as the Executive may
designate in writing to the Corporation, within
ten days of the rendering of such determination.
f. An Executive shall pay all Expenses incurred by such
Executive in connection with the judicial determination
provided in this Section 4, unless it shall ultimately
be determined by the court that he or she is entitled,
in whole or in part, to be indemnified by, or to
receive an advance from, the Corporation as authorized
by this Article VI. All Expenses incurred by an
Executive in connection with any subsequent appeal of
the judicial determination provided for in this
Section 4 shall be paid by the Executive regardless of
the disposition of such appeal.
5. TERMINATION OF AN ACTION IS NONCONCLUSIVE
The adverse termination of any Action against an Executive
by judgment, order settlement, conviction, or upon a plea of
no contest or its equivalent, shall not, of itself, create a
presumption that the Executive has engaged in misconduct
which constitutes a Breach of Duty.
6. PARTIAL INDEMNIFICATION; REASONABLENESS; INTEREST
a. If it is determined by the Authority, or by a court,
that an Executive is entitled to indemnification as to
some claims, issues, or matters, but not as to other
claims, issues, or matters, involved in any Action, the
Authority, or the court, shall authorize the proration
and payment by the Corporation of such Liabilities
and/or reasonable Expenses with respect to which
indemnification is sought by the Executive, among such
claims,
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issues, or matters as the Authority, or the court,
shall deem appropriate in light of all of the
circumstances of such Action.
b. If it is determined by the Authority, or by a court,
that certain Expenses incurred by or on behalf of an
Executive are for whatever reason unreasonable in
amount, the Authority, or the court, shall nonetheless
authorize indemnification to be paid by the Corporation
to the Executive for such Expenses as the Authority, or
the court, shall deem reasonable in light of all of the
circumstances of such Action.
c. Interest shall be paid by the Corporation to an
Executive, to the extent deemed appropriate by the
Authority, or by a court, at a reasonable interest
rate, for amounts for which the Corporation indemnifies
or advances to the Executive.
7. INSURANCE; SUBROGATION
a. The Corporation may purchase and maintain insurance on
behalf of any person who is or was an Executive of the
Corporation, and/or is or was serving as an Executive
of an Affiliate, against Liabilities and/or Expenses
asserted against him or her and/or incurred by or on
behalf of him or her in any such capacity, or arising
out of his or her status as such an Executive, whether
or not the Corporation would have the power to
indemnify him or her against such Liabilities and/or
Expenses under this Article VI or under the Statute as
it may then be in effect. Except as expressly provided
herein, the purchase and maintenance of such insurance
shall not in any way limit or affect the rights and
obligations of the Corporation and/or any Executive
under this Article VI. Such insurance may, but need
not, be for the benefit of all Executives of the
Corporation and those serving as an Executive of an
Affiliate.
b. If an Executive shall receive payment from any
insurance carrier or from the plaintiff in any Action
against such Executive in respect of indemnified
amounts after payments on account of all or part of
such indemnified amounts have been made by the
Corporation pursuant to this Article VI, such Executive
shall promptly reimburse the Corporation for the
amount, if any, by which the sum of such payment by
such insurance carrier or such plaintiff and payments
by the Corporation to such Executive exceeds such
indemnified amounts; provided, however, that such
portions, if any, of such insurance proceeds that are
required to be reimbursed to the insurance carrier
under the terms of its insurance policy, such as
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deductible, retention, or co-insurance amounts, shall
not be deemed to be payments to such Executive
hereunder.
c. Upon payment of indemnified amounts under this
Article VI, the Corporation shall be subrogated to such
Executive's rights against any insurance carrier in
respect of such indemnified amounts and the Executive
shall execute and deliver any and all instruments
and/or documents and perform any and all other acts or
deeds which the Corporation shall deem necessary or
advisable to secure such rights. The Executive shall
do nothing to prejudice such rights of recovery or
subrogation.
8. WITNESS EXPENSES
The Corporation shall advance or reimburse any and all
reasonable Expenses incurred by or on behalf of an Executive
in connection with his or her appearance as a witness in any
Action at a time when he or she has not been formally named
a defendant or respondent to such an Action, within ten days
after the receipt of an Executive's written request
therefor.
9. CONTRIBUTION
a. Subject to the limitations of this Section 9, if the
indemnity provided for in Section 1 of this Article VI
is unavailable to an Executive for any reason
whatsoever, the Corporation, in lieu of indemnifying
the Executive, shall contribute to the amount incurred
by or on behalf of the Executive, whether for
Liabilities and/or for reasonable Expenses in
connection with any Action in such proportion as deemed
fair and reasonable by the Authority, or by a court, in
light of all of the circumstances of any such Action,
in order to reflect:
(1) The relative benefits received by the Corporation
and the Executive as a result of the event(s)
and/or transaction(s) giving cause to such Action;
and/or
(2) The relative fault of the Corporation (and its
other Executives, employees, and/or agents) and
the Executive in connection with such event(s)
and/or transaction(s).
b. The relative fault of the Corporation (and its other
Executives, employees, and/or agents), on the one hand,
and of the Executive, on the other hand, shall be
determined by reference to, among other things, the
parties'
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relative intent, knowledge, access to information,
and opportunity to correct or prevent the
circumstances resulting in such Liabilities and/or
Expenses. The Corporation agrees that it would not be
just and equitable if contribution pursuant to this
Section 9 were determined by pro rata allocation or any
other method of allocation which does not take account
of the foregoing equitable considerations.
c. An Executive shall not be entitled to contribution from
the Corporation under this Section 9 in the event it is
determined by the Authority, or by a court, that the
Executive has engaged in misconduct which constitutes a
Breach of Duty.
d. The Corporation's payment of, and an Executive's right
to, contribution under this Section 9 shall be made and
determined in accordance with and pursuant to the
provisions in Sections 3 and/or 4 of this Article VI
relating to the Corporation's payment of, and the
Executive's right to, indemnification under this
Article VI.
10. INDEMNIFICATION OF EMPLOYEES
Unless otherwise specifically set forth in this Article VI,
the Corporation shall indemnify and hold harmless any person
who is or was a party, or is threatened to be made a party
to any Action by reason of his or her status as, or the fact
that he or she is or was an employee or authorized agent or
representative of the Corporation and/or an Affiliate as to
acts performed in the course and within the scope of such
employee's, agent's, or representative's duties to the
Corporation and/or an Affiliate, in accordance with and to
the fullest extent permitted by the Statute as it may then
be in effect.
11. SEVERABILITY
If any provision of this Article VI shall be deemed invalid
or inoperative, or if a court of competent jurisdiction
determines that any of the provisions of this Article VI
contravene public policy, this Article VI shall be construed
so that the remaining provisions shall not be affected, but
shall remain in full force and effect, and any such
provisions which are invalid or inoperative or which
contravene public policy shall be deemed, without further
Action or deed by or on behalf of the Corporation, to be
modified, amended, and/or limited, but only to the extent
necessary to render the same valid and enforceable, and the
Corporation shall indemnify an Executive as to Liabilities
and reasonable Expenses with respect to any Action to the
full extent permitted by any
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applicable provision of this Article VI that shall not
have been invalidated and to the full extent otherwise
permitted by the Statute as it may then be in effect.
12. NONEXCLUSIVITY OF ARTICLE VI
The right to indemnification, contribution, and advancement
of Expenses provided to an Executive by this Article VI
shall not be deemed exclusive of any other rights to
indemnification, contribution, and/or advancement of
Expenses which any Executive or other employee or agent of
the Corporation and/or of an Affiliate may be entitled under
any charter provision, written agreement, resolution, vote
of shareholders or disinterested directors of the
Corporation or otherwise, including, without limitation,
under the Statute as it may then be in effect, both as to
acts in his or her official capacity as such Executive or
other employee or agent of the Corporation and/or of an
Affiliate or as to acts in any other capacity while holding
such office or position, whether or not the Corporation
would have the power to indemnify, contribute, and/or
advance Expenses to the Executive under this Article VI or
under the Statute; provided that it is not determined that
the Executive or other employee or agent has engaged in
misconduct which constitutes a Breach of Duty.
13. NOTICE TO THE CORPORATION; DEFENSE OF ACTIONS
a. An Executive shall promptly notify the Corporation in
writing upon being served with or having actual know-
ledge of any citation, summons, complaint, indictment,
or any other similar document relating to any Action
which may result in a claim of indemnification,
contribution, or advancement of Expenses hereunder, but
the omission so to notify the Corporation will not
relieve the Corporation from any liability which it may
have to the Executive otherwise than under this
Article VI unless the Corporation shall have been
irreparably prejudiced by such omission.
b. With respect to any such Action as to which an
Executive notifies the Corporation of the commencement
thereof:
(1) The Corporation shall be entitled to participate
therein at its own expense; and
(2) Except as otherwise provided below, to the extent
that it may wish, the Corporation (or any other
indemnifying party, including any insurance
carrier, similarly notified by the Corporation or
the Executive) shall be entitled to assume the
defense thereof, with
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counsel selected by the Corporation (or such
other indemnifying party) and reasonably
satisfactory to the Executive.
c. After notice from the Corporation (or such other
indemnifying party) to the Executive of its election to
assume the defense of an Action, the Corporation shall
not be liable to the Executive under this Article VI
for any Expenses subsequently incurred by the Executive
in connection with the defense thereof other than
reasonable costs of investigation or as otherwise
provided below. The Executive shall have the right to
employ his or her own counsel in such Action but the
Expenses of such counsel incurred after notice from the
Corporation (or such other indemnifying party) of its
assumption of the defense thereof shall be at the
expense of the Executive unless:
(1) The employment of counsel by the Executive has
been authorized by the Corporation;
(2) The Executive shall have reasonably concluded that
there may be a conflict of interest between the
Corporation (or such other indemnifying party) and
the Executive in the conduct of the defense of
such Action; or
(3) The Corporation (or such other indemnifying party)
shall not in fact have employed counsel to assume
the defense of such Action, in each of which cases
the Expenses of counsel shall be at the expense of
the Corporation. The Corporation shall not be
entitled to assume the defense of any Derivative
Action or any Action as to which the Executive
shall have made the conclusion provided for in
clause (2) above.
14. CONTINUITY OF RIGHTS AND OBLIGATIONS
The terms and provisions of this Article VI shall continue
as to an Executive subsequent to the Termination Date and
such terms and provisions shall inure to the benefit of the
heirs, estate, executors, and administrators of such
Executive and the successors and assigns of the Corporation,
including, without limitation, any successor to the
Corporation by way of merger, consolidation, and/or sale or
disposition of all or substantially all of the assets or
capital stock of the Corporation. Except as provided
herein, all rights and obligations of the Corporation and
the Executive hereunder shall continue in full force and
effect despite the subsequent amendment or modification of
the Corporation's Articles of Incorporation, as such are in
effect on the date hereof, and such rights and
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obligations shall not be affected by any such amendment
or modification, any resolution of directors or shareholders
of the Corporation, or by any other corporate action which
conflicts with or purports to amend, modify, limit, or
eliminate any of the rights or obligations of the
Corporation and/or of the Executive hereunder.
15. AMENDMENT
This Article VI may only be altered, amended, or repealed by
the affirmative vote of a majority of the shareholders of
the Corporation so entitled to vote; provided, however, that
the Board may alter or amend this Article VI without such
shareholder approval if any such alteration or amendment:
a. Is made in order to conform to any amendment or
revision of the Wisconsin Business Corporation Law,
including, without limitation, the Statute, which
(1) Expands or permits the expansion of an Executive's
right to indemnification thereunder;
(2) Limits or eliminates, or permits the limitation or
elimination, of liability of the Executives; or
(3) Is otherwise beneficial to the Executives; or
b. In the sole judgment and discretion of the Board, does
not materially adversely affect the rights and
protections of the shareholders of the Corporation.
Any repeal, modification, or amendment of this Article VI
shall not adversely affect any rights or protections of an
Executive existing under this Article VI immediately prior
to the time of such repeal, modification, or amendment and
any such repeal, modification, or amendment shall have a
prospective effect only.
16. CERTAIN DEFINITIONS
The following terms as used in this Article VI shall be
defined as follows:
a. "Action(s)" shall include, without limitation, any
threatened, pending, or completed action, claim,
litigation, suit, or proceeding, whether civil,
criminal, administrative, arbitrative, or
investigative, whether predicated on foreign, Federal,
state, or local law, whether brought under and/or
30
<PAGE>
predicated upon the Securities Act of 1933, as amended,
and/or the Securities Exchange Act of 1934, as amended,
and/or their respective state counterparts and/or any
rule or regulation promulgated thereunder, whether a
Derivative Action and whether formal or informal.
b. "Affiliate" shall include, without limitation, any
corporation, partnership, joint venture, employee
benefit plan, trust, or other similar enterprise that
directly or indirectly through one or more
intermediaries, controls or is controlled by, or is
under common control with, the Corporation.
c. "Authority" shall mean the panel of arbitrators or
independent legal counsel selected under Section 3 of
this Article VI.
d. "Board" shall mean the Board of Directors of the
Corporation.
e. "Breach of Duty" shall mean the Executive breached or
failed to perform his or her duties to the Corporation
or an Affiliate, as the case may be, and the
Executive's breach of or failure to perform those
duties constituted:
(1) A willful failure to deal fairly with the
Corporation (or an Affiliate) or its shareholders
in connection with a matter in which the Executive
has a material conflict of interest;
(2) A violation of the criminal law, unless the
Executive:
(a) Had reasonable cause to believe his or her
conduct was lawful; or
(b) Had no reasonable cause to believe his or her
conduct was unlawful;
(3) A transaction from which the Executive derived an
improper personal profit (unless such profit is
determined to be immaterial in light of all the
circumstances of the Action); or
(4) Willful misconduct.
f. "Derivative Action" shall mean any Action brought by or
in the right of the Corporation and/or an Affiliate.
31
<PAGE>
g. "Executive(s)" shall mean any individual who is, was,
or has agreed to become a director and/or officer of
the Corporation and/or an Affiliate.
h. "Expenses" shall include, without limitation, all
expenses, fees, costs, charges, attorneys' fees and
disbursements, other out-of-pocket costs, reasonable
compensation for time spent by the Executive in
connection with the Action for which he or she is not
otherwise compensated by the Corporation, any
Affiliate, any third party or other entity, and any and
all other direct and indirect costs of any type or
nature whatsoever.
i. "Liabilities" shall include, without limitation,
judgments, amounts incurred in settlement, fines,
penalties and, with respect to any employee benefit
plan, any excise tax or penalty incurred in connection
therewith, and any and all other liabilities of every
type or nature whatsoever.
j. "Statute" shall mean Wisconsin Business Corporation Law
Sections 180.0850-180.0859 (or any successor
provisions).
k. "Termination Date" shall mean the date an Executive
ceases, for whatever reason, to serve in an employment
relationship with the Company and/or any Affiliate.
ARTICLE VII. SEAL
BOARD OF DIRECTORS
The Board of Directors shall provide a corporate seal which shall
be circular in form and shall have inscribed thereon the words
"WPS RESOURCES CORPORATION, CORPORATE SEAL." The continued use
for any purpose of any former corporate seal or facsimile thereof
shall have the same effect as the use of the corporate seal or
facsimile thereof in the form provided by the preceding sentence.
ARTICLE VIII. AMENDMENTS
1. The Board of Directors shall have authority to adopt, amend,
or repeal the By-laws of this Corporation upon affirmative
vote of a majority of the total number of directors at a
meeting of the Board, the notice of which shall have
included notice of the proposed amendment; but the Board of
Directors shall have no power to amend any By-law or to
reinstate any By-law repealed by the
32
<PAGE>
shareholders unless the shareholders shall hereafter
confer such authority upon the Board of Directors.
2. The shareholders shall have power to adopt, amend, or repeal
any of the By-laws of the Corporation, at any regular or
special meeting of the shareholders, in accordance with the
provisions of Article II of these By-laws. There shall be
included in the notice of such regular or special meeting a
statement of the nature of any amendment that is proposed
for the consideration of the shareholders by the holders of
at least 5% of the voting stock of the Corporation in a
writing delivered to the Secretary of the Corporation not
less than 90 days prior to the date of such meeting or by
the Board of Directors.
33
<PAGE>
<TABLE>
EXHIBIT 11
WPS RESOURCES CORPORATION
<CAPTION>
============================================================================================
INFORMATION WITH RESPECT TO THE COMPUTATION
OF EARNINGS PER SHARE OF COMMON STOCK Three Months Ended Nine Months Ended
(Thousands) September 30 September 30
1996 1995 1996 1995
============================================================================================
<S> <C> <C> <C> <C>
Shares of common stock at beginning of period 23,891 23,897 23,897 23,897
Shares of common stock purchased for deferred
compensation trust -
Date of deferred Number
compensation trust purchase of Shares
- --------------------------- ---------
January 22, 1996 469 1
February 20, 1996 1,027 1
March 21, 1996 1,133 1
April 22, 1996 1,075 1
May 20, 1996 1,119 1
June 20, 1996 1,257 1
July 22, 1996 1,095 1 1
August 22, 1996 1,627 2 2
September 24, 1996 1,272 1 1
- --------------------------------------------------------------------------------------------
Shares of common stock at end of period 23,887 23,897 23,887 23,897
============================================================================================
Computation of daily weighted average
shares:
Shares of common stock at
beginning of period -
Number Number
of of
Days Shares
------ ------
September 30, 1995 273 23,896,962 6,523,871
September 30, 1995 92 23,896,962 - 2,198,521
September 30, 1996 21 23,890,884 501,709 -
September 30, 1996 21 23,896,962 501,836
Shares of common stock after
purchase for deferred compensation trust -
Number Number
of of
Days Shares
------ ------
September 30, 1996 29 23,896,493 692,998
September 30, 1996 10 23,895,466 238,955
September 30, 1996 20 23,895,467 477,909
September 30, 1996 32 23,894,334 764,619
September 30, 1996 28 23,893,259 669,011
September 30, 1996 18 23,892,140 430,059
September 30, 1996 13 23,892,141 310,598
September 30, 1996 32 23,890,884 764,508
September 30, 1996 31 23,889,788 740,583 740,583
September 30, 1996 33 23,888,162 788,309 788,309
September 30, 1996 7 23,886,890 167,208 167,208
- --------------------------------------------------------------------------------------------
Total days - weighted 2,197,809 2,198,521 6,546,593 6,523,871
============================================================================================
Average number of shares of common
stock based on daily
weighted average computations 23,889 23,897 23,893 23,897
============================================================================================
Earnings on common stock, as set forth
in statements of income $10,385 $15,732 $44,025 $41,836
============================================================================================
Earnings per share of common stock based on
weighted average shares $0.43 $0.66 $1.84 $1.75
============================================================================================
The accompanying notes to financial statements are an integral part of these statements.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT EXHIBIT 27
<CIK> 0000916863
<NAME> WPS RESOURCES CORPORATION
<SUBSIDIARY>
<NUMBER> 1
<NAME> WISCONSIN PUBLIC SERVICE CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 886,786
<OTHER-PROPERTY-AND-INVEST> 117,265
<TOTAL-CURRENT-ASSETS> 167,605
<TOTAL-DEFERRED-CHARGES> 100,943
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,272,599
<COMMON> 23,897
<CAPITAL-SURPLUS-PAID-IN> 145,021
<RETAINED-EARNINGS> 304,632
<TOTAL-COMMON-STOCKHOLDERS-EQ> 473,550
0
51,200
<LONG-TERM-DEBT-NET> 297,924
<SHORT-TERM-NOTES> 22,216
<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> 0
<TOT-CAPITALIZATION-AND-LIAB> 844,890
<GROSS-OPERATING-REVENUE> 612,198
<INCOME-TAX-EXPENSE> 22,709
<OTHER-OPERATING-EXPENSES> 527,825
<TOTAL-OPERATING-EXPENSES> 527,825<F1>
<OPERATING-INCOME-LOSS> 84,373<F2>
<OTHER-INCOME-NET> 2,806
<INCOME-BEFORE-INTEREST-EXPEN> 69,067<F3>
<TOTAL-INTEREST-EXPENSE> 18,112
<NET-INCOME> 46,358
2,333
<EARNINGS-AVAILABLE-FOR-COMM> 44,025
<COMMON-STOCK-DIVIDENDS> 33,575
<TOTAL-INTEREST-ON-BONDS> 18,816
<CASH-FLOW-OPERATIONS> 92,778
<EPS-PRIMARY> 1.84
<EPS-DILUTED> 1.84
<FN>
<F1>Operating expenses exclude income taxes of $22,709.
<F2>Operating income is before income taxes of $22,709.
<F3>Income before interest expense is before income taxes of
$22,709.
</FN>
</TABLE>
