______________________________________________________________________________
______________________________________________________________________________
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 June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission 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
July 25, 1997
WISCONSIN PUBLIC SERVICE CORPORATION Common stock, $4 par value,
23,896,962 shares outstanding at
July 25, 1997
______________________________________________________________________________
______________________________________________________________________________
<PAGE>
WPS RESOURCES CORPORATION
AND
WISCONSIN PUBLIC SERVICE CORPORATION
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1997
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 - 15
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations for
WPS Resources Corporation and
Wisconsin Public Service Corporation 16 - 24
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 25
Item 5. Other Information 25 - 27
Item 6. Exhibits and Reports on Form 8-K 28
Signatures 29 - 30
-2-
<PAGE>
EXHIBIT INDEX 31
Exhibit 10.5 Deferred Compensation Plan
WPS Resources Corporation
Exhibit 10.6 Executive Employment and Severance Agreement
WPS Resources 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, 1996.
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
characteristics of WPSC's utility operations, financial results for
the periods ended June 30, 1997 and 1996 are not necessarily
indicative of trends for any 12-month period.
-4-
<PAGE>
<PAGE>
<TABLE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
WPS RESOURCES CORPORATION
<CAPTION>
============================================================================================================================
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS Three Months Ended Six Months Ended
(Thousands, except per share amounts) June 30 June 30
1997 1996 1997 1996
============================================================================================================================
<S> <C> <C> <C> <C>
Operating revenues
Electric utility $118,263 $116,928 $241,227 $239,492
Gas utility 39,326 40,271 123,906 118,644
Non-regulated energy and other 33,771 24,429 89,240 74,829
- ----------------------------------------------------------------------------------------------------------------------------
Total operating revenues 191,360 181,628 454,373 432,965
============================================================================================================================
Operating expenses
Electric production fuels 24,506 24,269 51,651 50,818
Purchased power 14,901 9,233 29,057 16,332
Gas purchased for resale 25,980 28,219 87,493 81,960
Non-regulated energy cost of sales 32,251 24,116 86,611 74,516
Other operating expenses 38,057 40,078 76,292 80,025
Maintenance 13,409 12,525 22,877 21,773
Depreciation and decommissioning 19,716 16,032 37,643 32,540
Taxes other than income 6,920 6,550 13,859 13,396
- ----------------------------------------------------------------------------------------------------------------------------
Total operating expenses 175,740 161,022 405,483 371,360
============================================================================================================================
Operating income 15,620 20,606 48,890 61,605
- ----------------------------------------------------------------------------------------------------------------------------
Other income
Allowance for equity funds used during construction 33 33 68 70
Other, net 5,564 1,813 6,712 3,131
- ----------------------------------------------------------------------------------------------------------------------------
Total other income 5,597 1,846 6,780 3,201
============================================================================================================================
Income before interest expense 21,217 22,452 55,670 64,806
- ----------------------------------------------------------------------------------------------------------------------------
Interest on long-term debt 5,655 5,432 11,179 10,841
Other interest 562 566 1,590 1,274
Allowance for borrowed funds used during construction (30) (32) (64) (64)
- ----------------------------------------------------------------------------------------------------------------------------
Total interest expense 6,187 5,966 12,705 12,051
============================================================================================================================
Income before income taxes 15,030 16,486 42,965 52,755
Income taxes 4,866 5,588 14,069 17,559
Minority interest (185) - (466) -
Preferred stock dividends of subsidiary 778 778 1,556 1,556
- ----------------------------------------------------------------------------------------------------------------------------
Net income 9,571 10,120 27,806 33,640
============================================================================================================================
Retained earnings at beginning of period 318,678 321,373 311,794 308,965
Cash dividends on common stock 11,351 11,112 22,702 22,224
- ----------------------------------------------------------------------------------------------------------------------------
Retained earnings at end of period $316,898 $320,381 $316,898 $320,381
============================================================================================================================
Average shares of common stock 23,875 23,893 23,878 23,894
Earnings per average share of common stock $0.40 $0.42 $1.16 $1.41
Dividend per share of common stock $0.475 $0.465 $0.950 $0.930
============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
-5-
PAGE
<PAGE>
<TABLE>
WPS RESOURCES CORPORATION
<CAPTION>
======================================================================================================
CONSOLIDATED BALANCE SHEETS June 30 December 31
(Thousands) 1997 1996
======================================================================================================
<S> <C> <C>
ASSETS
- ------------------------------------------------------------------------------------------------------
Utility plant
Electric $1,492,728 $1,474,104
Gas 244,084 240,791
- ------------------------------------------------------------------------------------------------------
Total 1,736,812 1,714,895
Less - Accumulated depreciation and decommissioning 996,514 952,296
- ------------------------------------------------------------------------------------------------------
Total 740,298 762,599
Nuclear decommissioning trusts 117,814 100,570
Construction in progress 12,895 10,301
Nuclear fuel, less accumulated amortization 20,920 19,381
- ------------------------------------------------------------------------------------------------------
Net utility plant 891,927 892,851
======================================================================================================
Current assets
Cash and equivalents 4,469 5,978
Customer and other receivables, net of reserves 80,852 106,967
Accrued utility revenues 18,400 35,386
Fossil fuel, at average cost 11,676 8,224
Gas in storage, at average cost 11,691 19,987
Materials and supplies, at average cost 19,715 19,944
Prepayments and other 19,675 22,658
- ------------------------------------------------------------------------------------------------------
Total current assets 166,478 219,144
======================================================================================================
Regulatory assets 87,959 96,920
Net non-utility and non-regulated plant 18,913 19,738
Investments and other assets 112,298 102,011
======================================================================================================
Total $1,277,575 $1,330,664
======================================================================================================
CAPITALIZATION AND LIABILITIES
- ------------------------------------------------------------------------------------------------------
Capitalization
Common stock equity $ 474,047 $ 467,524
Preferred stock of subsidiary
with no mandatory redemption 51,200 51,200
Long-term debt 304,955 305,788
- ------------------------------------------------------------------------------------------------------
Total capitalization 830,202 824,512
======================================================================================================
Current liabilities
Notes payable 12,900 26,600
Commercial paper 7,600 31,350
Accounts payable 69,613 96,531
Accrued taxes 813 1,350
Accrued interest 8,132 8,134
Other 19,013 12,771
- ------------------------------------------------------------------------------------------------------
Total current liabilities 118,071 176,736
======================================================================================================
Long-term liabilities and deferred credits
Accumulated deferred income taxes 128,042 130,208
Accumulated deferred investment credits 27,785 28,669
Regulatory liabilities 49,340 48,870
Environmental remediation liabilities 40,066 41,697
Other long-term liabilities 84,676 80,173
- ------------------------------------------------------------------------------------------------------
Total long-term liabilities and deferred credits 329,909 329,617
======================================================================================================
Minority interest (607) (201)
======================================================================================================
Total $1,277,575 $1,330,664
======================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
-6-
PAGE
<PAGE>
<TABLE>
WPS RESOURCES CORPORATION
<CAPTION>
=====================================================================================================
CONSOLIDATED STATEMENTS OF CAPITALIZATION June 30 December 31
(Thousands, except share amounts) 1997 1996
=====================================================================================================
<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 316,898 311,794
Shares in deferred compensation trust, 24,852 and 14,223 shares
at average cost of $29.38 and $31.16 per share at
June 30, 1997 and December 31, 1996, respectively. (730) (443)
ESOP loan guarantees (11,039) (12,745)
- -----------------------------------------------------------------------------------------------------
Total common stock equity 474,047 467,524
=====================================================================================================
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 53,100
7-1/8% 2023 50,000 50,000
- -----------------------------------------------------------------------------------------------------
Total 284,175 284,175
Unamortized discount and premium on bonds, net (934) (978)
- -----------------------------------------------------------------------------------------------------
Total first mortgage bonds 283,241 283,197
- -----------------------------------------------------------------------------------------------------
ESOP loan guarantees 11,039 12,745
Notes payable to bank, secured by non-regulated plant 10,437 9,581
Other long-term debt 238 265
- -----------------------------------------------------------------------------------------------------
Total long-term debt 304,955 305,788
=====================================================================================================
Total capitalization $830,202 $824,512
=====================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
-7-
PAGE
<PAGE>
<TABLE>
WPS RESOURCES CORPORATION
<CAPTION>
============================================================================================
CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended
(Thousands) June 30
1997 1996
============================================================================================
<S> <C> <C>
Cash flows from operating activities
Net income $27,806 $33,640
Adjustments to reconcile net income to net cash from
operating activities
Depreciation and decommissioning 37,643 32,540
Amortization of nuclear fuel and other 4,432 15,198
Deferred income taxes (3,038) (3,750)
Investment tax credit restored (884) (889)
Allowance for equity funds used during construction (68) (70)
Pension income (6,182) (6,229)
Post-retirement funding 2,494 3,575
Deferred demand-side management expenditures (5) (3,893)
Other, net 5,927 (1,908)
Changes in
Customer and other receivables 26,115 3,724
Accrued utility revenues 16,986 18,924
Fossil fuel inventory (3,452) (1,430)
Gas in storage 8,296 (776)
Accounts payable (26,918) (6,001)
Miscellaneous current and accrued liabilities 6,226 5,938
Accrued taxes (537) 3,701
Gas refunds 17 (5,668)
- --------------------------------------------------------------------------------------------
Net cash from operating activities 94,858 86,626
============================================================================================
Cash flows from (used for) investing activities
Construction of utility plant and nuclear fuel expenditures (29,480) (40,840)
Purchase of other property and equipment (301) (800)
Decommissioning funding (7,439) (4,489)
Purchase of investments and acquisitions 617 0
Other (497) 288
- --------------------------------------------------------------------------------------------
Net cash from (used for) investing activities (37,100) (45,841)
============================================================================================
Cash flows from (used for) financing activities
Change in notes payable (13,700) (400)
Change in other long-term debt 1,173 (6,900)
Change in commercial paper (23,750) (11,500)
Cash dividends on common stock (22,702) (22,224)
Purchase of deferred compensation stock (288) (195)
- --------------------------------------------------------------------------------------------
Net cash from (used for) financing activities (59,267) (41,219)
============================================================================================
Net increase (decrease) in cash and equivalents (1,509) (434)
Cash and equivalents at beginning of period 5,978 6,533
============================================================================================
Cash and equivalents at end of period $ 4,469 $ 6,099
============================================================================================
Cash paid during period for
Interest, less amount capitalized $11,385 $10,668
Income taxes 19,820 17,330
Preferred stock dividends of subsidiary 1,556 1,556
============================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
-8-
PAGE
<PAGE>
<TABLE>
WISCONSIN PUBLIC SERVICE CORPORATION
<CAPTION>
============================================================================================================================
CONSOLIDATED STATEMENTS OF INCOME Three Months Ended Six Months Ended
(Thousands) June 30 June 30
1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating revenues
Electric $118,263 $116,928 $241,227 $239,492
Gas 39,326 40,271 123,906 118,644
- ----------------------------------------------------------------------------------------------------------------------------
Total operating revenues 157,589 157,199 365,133 358,136
============================================================================================================================
Operating expenses
Electric production fuels 24,506 24,269 51,651 50,818
Purchased power 14,901 9,233 29,057 16,332
Gas purchased for resale 25,896 28,219 87,409 81,960
Other operating expenses 34,300 38,642 68,303 77,142
Maintenance 13,409 12,525 22,877 21,773
Depreciation and decommissioning 19,287 15,743 36,815 32,012
Taxes
Federal income 3,534 4,918 12,204 14,902
Investment tax credit restored (442) (445) (884) (889)
State income 1,143 1,492 3,913 4,676
Gross receipts and other 6,894 6,550 13,825 13,396
- ----------------------------------------------------------------------------------------------------------------------------
Total operating expenses 143,428 141,146 325,170 312,122
============================================================================================================================
Operating income 14,161 16,053 39,963 46,014
- ----------------------------------------------------------------------------------------------------------------------------
Other income and (deductions)
Allowance for equity funds used during construction 33 33 68 70
Other, net 5,378 1,761 6,784 3,026
Income taxes (1,483) (184) (1,515) (284)
- ----------------------------------------------------------------------------------------------------------------------------
Total other income and (deductions) 3,928 1,610 5,337 2,812
============================================================================================================================
Income before interest expense 18,089 17,663 45,300 48,826
- ----------------------------------------------------------------------------------------------------------------------------
Interest expense
Interest on long-term debt 5,634 5,696 11,268 11,239
Other interest 493 524 1,347 1,216
Allowance for borrowed funds used during construction (30) (32) (64) (64)
- ----------------------------------------------------------------------------------------------------------------------------
Total interest expense 6,097 6,188 12,551 12,391
============================================================================================================================
Net income 11,992 11,475 32,749 36,435
Preferred stock dividend requirements 778 778 1,556 1,556
- ----------------------------------------------------------------------------------------------------------------------------
Earnings on common stock $ 11,214 $ 10,697 $ 31,193 $ 34,879
============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
-9-
PAGE
<PAGE>
<TABLE>
WISCONSIN PUBLIC SERVICE CORPORATION
<CAPTION>
==================================================================================================
CONSOLIDATED BALANCE SHEETS June 30 December 31
(Thousands) 1997 1996
==================================================================================================
<S> <C> <C>
ASSETS
- --------------------------------------------------------------------------------------------------
Utility plant
Electric $1,492,728 $1,474,104
Gas 244,084 240,791
- --------------------------------------------------------------------------------------------------
Total 1,736,812 1,714,895
Less - Accumulated depreciation and decommissioning 996,514 952,296
- --------------------------------------------------------------------------------------------------
Total 740,298 762,599
Nuclear decommissioning trusts 117,814 100,570
Construction in progress 12,895 10,301
Nuclear fuel, less accumulated amortization 20,920 19,381
- --------------------------------------------------------------------------------------------------
Net utility plant 891,927 892,851
==================================================================================================
Current assets
Cash and equivalents 3,367 4,165
Customer and other receivables, net of reserves 63,521 66,234
Accrued utility revenues 18,400 35,326
Fossil fuel, at average cost 11,402 8,224
Gas in storage, at average cost 10,457 16,440
Materials and supplies, at average cost 19,715 19,796
Prepayments and other 19,449 22,189
- --------------------------------------------------------------------------------------------------
Total current assets 146,311 172,374
==================================================================================================
Regulatory assets 87,959 96,920
Net non-utility plant 3,018 4,191
Investments and other assets 103,218 92,612
==================================================================================================
Total $1,232,433 $1,258,948
==================================================================================================
CAPITALIZATION AND LIABILITIES
- --------------------------------------------------------------------------------------------------
Capitalization
Common stock equity $ 448,621 $ 448,425
Preferred stock with no mandatory redemption 51,200 51,200
Long-term debt to parent 14,494 14,612
Long-term debt 294,518 296,207
- --------------------------------------------------------------------------------------------------
Total capitalization 808,833 810,444
==================================================================================================
Current liabilities
Note payable 10,000 10,000
Commercial paper 7,600 29,000
Accounts payable 53,077 62,500
Accrued taxes 813 1,350
Accrued interest 8,132 8,134
Other 18,638 12,324
- --------------------------------------------------------------------------------------------------
Total current liabilities 98,260 123,308
==================================================================================================
Long-term liabilities and deferred credits
Accumulated deferred income taxes 129,655 131,549
Accumulated deferred investment tax credits 27,785 28,669
Regulatory liabilities 49,340 48,870
Environmental remediation liabilities 40,066 41,697
Other long-term liabilities 78,494 74,411
- --------------------------------------------------------------------------------------------------
Total long-term liabilities and deferred credits 325,340 325,196
==================================================================================================
Total $1,232,433 $1,258,948
==================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
-10-
PAGE
<PAGE>
<TABLE>
WISCONSIN PUBLIC SERVICE CORPORATION
<CAPTION>
========================================================================================================
CONSOLIDATED STATEMENTS OF CAPITALIZATION June 30 December 31
(Thousands, except share amounts) 1997 1996
========================================================================================================
<S> <C> <C>
Common stock equity
Common stock $ 95,588 $ 95,588
Premium on capital stock 73,842 73,842
Retained earnings 290,230 291,740
ESOP loan guarantees (11,039) (12,745)
- --------------------------------------------------------------------------------------------------------
Total common stock equity 448,621 448,425
========================================================================================================
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 debt to parent
Series Year Due
------ --------
8.76% 2015 5,964 6,012
7.35% 2016 8,530 8,600
- --------------------------------------------------------------------------------------------------------
Total long-term debt to parent 14,494 14,612
========================================================================================================
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 53,100
7-1/8% 2023 50,000 50,000
- --------------------------------------------------------------------------------------------------------
Total 284,175 284,175
Unamortized discount and premium on bonds, net (934) (978)
- --------------------------------------------------------------------------------------------------------
Total first mortgage bonds 283,241 283,197
- --------------------------------------------------------------------------------------------------------
ESOP loan guarantees 11,039 12,745
Other long-term debt 238 265
- --------------------------------------------------------------------------------------------------------
Total long-term debt 294,518 296,207
========================================================================================================
Total capitalization $808,833 $810,444
========================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
-11-
PAGE
<PAGE>
<TABLE>
WISCONSIN PUBLIC SERVICE CORPORATION
<CAPTION>
============================================================================================
CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended
(Thousands) June 30
1997 1996
============================================================================================
<S> <C> <C>
Cash flows from operating activities
Net income $32,749 $36,435
Adjustments to reconcile net income to net cash from
operating activities
Depreciation and decommissioning 36,815 32,012
Amortization of nuclear fuel and other 4,432 14,742
Deferred income taxes (2,766) (3,549)
Investment tax credit restored (884) (889)
Allowance for equity funds used during construction (68) (70)
Pension income (6,182) (6,229)
Post-retirement funding 2,494 3,575
Deferred demand-side management expenditures (5) (3,893)
Other, net 5,721 (1,565)
Changes in
Customer and other receivables 2,713 1,223
Accrued utility revenues 16,926 18,924
Fossil fuel inventory (3,178) (1,430)
Gas in storage 5,983 (847)
Accounts payable (9,423) (3,558)
Miscellaneous current and accrued liabilities 6,297 7,976
Accrued taxes (537) 1,891
Gas refunds 17 (5,668)
- --------------------------------------------------------------------------------------------
Net cash from operating activities 91,104 89,080
============================================================================================
Cash flows from (used for) investing activities
Construction of utility plant and nuclear fuel expenditures (29,480) (40,904)
Decommissioning funding (7,439) (4,489)
Purchase of other property and equipment (94) (343)
Other 770 220
- --------------------------------------------------------------------------------------------
Net cash from (used for) investing activities (36,243) (45,516)
============================================================================================
Cash flows from (used for) financing activities
Redemption of first mortgage bonds 0 (6,900)
Proceeds of long-term debt from parent 0 8,618
Change in commercial paper (21,400) (11,500)
Preferred stock dividends (1,556) (1,556)
Common stock dividends (32,703) (33,224)
- --------------------------------------------------------------------------------------------
Net cash from (used for) financing activities (55,659) (44,562)
============================================================================================
Net increase (decrease) in cash and equivalents (798) (998)
Cash and equivalents at beginning of period 4,165 4,471
============================================================================================
Cash and equivalents at end of period $ 3,367 $ 3,473
============================================================================================
Cash paid during period for
Interest, less amount capitalized $11,135 $10,668
Income taxes 23,561 18,372
============================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
-12-
PAGE
<PAGE>
<TABLE>
WISCONSIN PUBLIC SERVICE CORPORATION
<CAPTION>
============================================================================================
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS Six Months Ended
(Thousands) June 30
1997 1996
============================================================================================
<S> <C> <C>
Balance at beginning of period $291,740 $290,387
Add Net income 32,749 36,435
- --------------------------------------------------------------------------------------------
324,489 326,822
- --------------------------------------------------------------------------------------------
Deduct
Cash dividends declared on preferred stock 1,556 1,556
Dividends declared on common stock 32,703 33,224
- --------------------------------------------------------------------------------------------
34,259 34,780
- --------------------------------------------------------------------------------------------
Balance at end of period $290,230 $292,042
============================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
-13-
PAGE
<PAGE>
WPS RESOURCES CORPORATION AND SUBSIDIARIES
WISCONSIN PUBLIC SERVICE CORPORATION
CONDENSED NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
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. EARNINGS PER SHARE
___________________________
In February 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 128,
Earnings Per Share. This statement establishes standards for
computing and presenting earnings per share. The Company will be
adopting this standard at December 31, 1997 and does not expect that
adoption will have an impact on its presentation of earnings per
share.
NOTE 3. COMPREHENSIVE INCOME
_____________________________
In June 1997, the FASB issued SFAS No. 130, Reporting of Comprehensive
Income, which establishes standards for reporting and display of
-14-
<PAGE>
comprehensive income and its components of revenues, expenses, gains,
and losses. The statement is effective for fiscal years beginning
after December 15, 1997 and the Company will be adopting the
requirements for reporting comprehensive income in the first quarter
of 1998.
NOTE 4. SEGMENT DISCLOSURES
____________________________
In June 1997, the FASB issued SFAS No. 131, Disclosures about Segments
of an Enterprise and Related Information. This statement establishes
standards for reporting information about operating segments and is
effective for periods beginning after December 15, 1997. The Company
will be adopting the requirements of this statement in the first
quarter of 1998.
NOTE 5. AGREEMENT TO MERGE WITH UPPER PENINSULA ENERGY CORPORATION
___________________________________________________________________
On July 10, 1997, the Company announced a merger agreement with
Upper Peninsula Energy Corporation ("UPEN"). The merger is subject to
(i) approval by the shareholders of UPEN; (ii) approval by the
Federal Energy Regulatory Commission; (iii) the Form S-4 Registration
Statement of the Company being declared effective by the Securities
and Exchange Commission; (iv) the expiration or termination of the
waiting period applicable to the merger under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976; (v) receipt by the parties of an
opinion of counsel that the exchange of stock qualifies as a tax-free
transaction; (vi) receipt by the parties of appropriate assurances
that the transaction will be accounted for as a pooling of interests;
and (vii) the satisfaction of various other conditions. The merger is
expected to be completed in 1998. UPEN will merge with and into the
Company and the Upper Peninsula Power Company, UPEN's utility
subsidiary, will become a wholly-owned subsidiary of the Company.
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<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 80% of the Company's assets and revenues,
respectively, are derived from Wisconsin Public Service Corporation
("WPSC"), an electric and gas utility.
OVERVIEW OF SECOND QUARTER OF 1997 COMPARED TO SECOND QUARTER OF 1996
Earnings per share were $.40 in 1997 compared to $.42 in 1996.
Electric utility margins at WPSC was lower in 1997 compared to 1996 as
a result of the implementation of a Public Service Commission of
Wisconsin ("PSCW") rate order which was received on February 20, 1997,
and authorized a $35.5 million, or 8.1%, electric rate reduction. In
addition, electric margins were affected by increased replacement
power costs as a result of an extended outage at WPSC's Kewaunee
Nuclear Power Plant ("Kewaunee"). WPSC is the operator and 41.2%
owner of Kewaunee. A $2.0 million per month surcharge authorized by
the PSCW in the February 20 order partially offset the increase to
replacement power costs. Kewaunee returned to service in mid-June,
1997, and the $2.0 million per month surcharge was discontinued
effective July 1, 1997. Other significant factors for the quarter
include a decrease in operating expenses at WPSC and an increase in
operating expenses at the Company's non-regulated subsidiaries. Other
income increased at WPSC as a result of one-time gains on the sale of
non-utility property.
ELECTRIC UTILITY OPERATIONS
Electric margins were lower than 1996 by $4.6 million, or 5.5%, due to
increased replacement power costs as a result of an extended outage at
Kewaunee and implementation of a PSCW rate order which reduced
electric rates. A surcharge authorized by the PSCW partially offset
the increases to replacement power costs.
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<PAGE>
Second Quarter
---------------------------
Electric Margins (000's) 1997 1996
- ------------------------ ---- ----
Revenues $118,263 $116,928
Fuel and purchased power 39,407 33,502
------- -------
Margins $ 78,856 $ 83,426
======= =======
Sales in kilowatt-hours (000) 2,719,481 2,673,817
Electric revenues remained fairly stable during the second quarter of
1997 as compared to the second quarter of 1996 despite the 8.1% rate
decrease. Commercial and industrial Kwh sales rose 7.0% reflecting
colder weather and customer growth. Wholesale Kwh sales decreased
12.3% because WPSC did not have the generation available to sell to
wholesale customers.
Electric fuels and purchases increased $5.9 million, or 17.6%, in the
second quarter of 1997 as compared to the same period in 1996. This
increase was the result of increased purchased power costs of
$5.7 million, or 61.4%, reflecting a 45.8% increase in Kwh purchases.
Purchased power requirements were increased due to decreased
production at Kewaunee as a result of an extended outage. Purchased
power represented 25.8% of total Kwh generation in the second quarter
of 1997 compared to 18.0% in the second quarter of 1996.
GAS UTILITY OPERATIONS
Gas margins increased $1.3 million, or 10.7%, due primarily to a 5.9%
increase in heating degree days and a gas rate increase.
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<PAGE>
Second Quarter
--------------------------
Gas Margins (000's) 1997 1996
- ------------------- ---- ----
Revenues $39,326 $40,271
Purchase costs 25,980 28,219
------ ------
Margins $13,346 $12,052
====== ======
Volume in therms (000) 134,194 126,328
The PSCW allows WPSC to pass changes in the cost of gas on to
customers through a purchased gas adjustment clause.
Gas operating revenues remained fairly stable during the second
quarter of 1997 compared to the second quarter of 1996. Gas sales
volumes increased by 3.5% while gas costs decreased by 5.7%. Gas
revenues also reflect implementation of a PSCW order authorizing a
$5.7 million, or 2.7%, increase in gas rates.
Gas purchased for resale decreased $2.2 million, or 7.9%, in the
second quarter of 1997 as compared to the same period in 1996. This
decrease was due primarily to lower gas costs in the second quarter of
1997.
NON-REGULATED OPERATIONS
Non-regulated energy and other operating revenues increased
$9.3 million, or 38.2%. Non-regulated energy revenues primarily
represent the electric and gas sales of WPS Energy Services, Inc.
("ESI"), the Company's energy marketing subsidiary. The increase in
non-regulated energy revenues consisted largely of increased gas sales
at ESI of $5.1 million, or 20.7%, as a result of customer growth. In
addition, ESI had increased revenues of $2.8 million related to
electric sales. ESI received power "marketer" status from the Federal
Energy Regulatory Commission in April of 1996 which provided increased
flexibility for the sale of electric energy and capacity at market
rates.
Other operating revenues increased $.4 million due to increased
consulting activities at WPS Power Development, Inc. ("PDI"), a
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company organized to participate in the development of electric
generation projects and to provide services to the non-regulated
electric power generation industry.
Non-regulated energy cost of sales increased $8.1 million, or 33.7%,
due primarily to increased gas purchases and purchased power costs of
$5.3 million and $2.7 million, respectively, at ESI.
OTHER EXPENSES
Other operating expenses at the Company decreased $2.0 million, or
5.0%.
Other operating expenses at WPSC decreased $4.3 million, or 11.2%.
This decrease was due to lower customer service expenses of
$2.1 million and lower electric operating expenses of $1.5 million
partially due to completion in 1996 of the retail amortization related
to a deferred coal and rail contract settlement. In addition, WPSC
has initiated several cost control efforts which have decreased
operating expenses.
Other operating expenses at ESI increased $.8 million, or 66.9%, due
to expansion of the business.
Other operating expenses at PDI increased $1.0 million as a result of
expansion of the business and initial operation of the Stoneman Power
Plant. Other operating expenses also increased at the Company.
Depreciation and decommissioning expenses increased $3.7 million, or
23.0%, largely due to the accelerated recovery of investment in
Kewaunee and accelerated funding of Kewaunee decommissioning costs.
Other income increased $3.8 million, or 203.2%, due primarily to gains
on sales of non-utility property at WPSC which represented
approximately $.07 per share.
OVERVIEW OF SIX MONTHS OF 1997 COMPARED TO SIX MONTHS OF 1996
Earnings per share were $1.16 in 1997 compared to $1.41 in 1996. The
primary reason for the variance in earnings was a decrease in the
electric utility margin at WPSC. The electric margin decrease was
primarily a result of the implementation of a PSCW rate order on
February 21, 1997, which authorized an 8.1% electric rate reduction.
In addition, electric margins decreased due to increased replacement
power costs as a result of an extended outage at Kewaunee. A
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$2.0 million per month surcharge authorized by the PSCW beginning
February 21, 1997, partially offset the increases to replacement power
costs. Kewaunee returned to service in mid-June, 1997, and the
$2.0 million per month surcharge was discontinued effective
July 1, 1997.
ELECTRIC UTILITY OPERATIONS
Electric margins decreased by $11.8 million, or 6.9%, due to increased
replacement power costs as a result of an extended outage at Kewaunee
and implementation of a PSCW rate order which reduced electric rates.
A surcharge authorized by the PSCW partially offset increases to
replacement power costs in the latter part of the first quarter and in
the second quarter.
Six Months
---------------------------
Electric Margins (000's) 1997 1996
- ------------------------ ---- ----
Revenues $241,227 $239,492
Fuel and purchased power 80,708 67,150
------- -------
Margins $160,519 $172,342
======= =======
Sales in kilowatt-hours (000) 5,478,241 5,411,647
Electric revenues increased $1.7 million, or .7%, during the first six
months of 1997 compared to the first six months of 1996. Commercial
and industrial sales rose 5.8% while wholesale Kwh sales decreased
10.8% because WPSC did not have the generation available to sell to
wholesale customers.
Electric fuel and purchases increased $13.6 million, or 20.2%, in the
first six months of 1997 compared to the first six months of 1996.
This increase was primarily the result of increased purchased power
costs of $12.7 million, or 77.9%, reflecting a 55.9% increase in Kwh
purchases. Purchased power requirements were increased due to
decreased production at Kewaunee as a result of an extended outage.
Purchased power represented 24.6% of total Kwh generation for the
six-month period ended June 30, 1997 compared to 15.9% for the same
period in 1996.
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<PAGE>
GAS UTILITY OPERATIONS
Gas margins remained fairly stable between the first six months of
1997 and the first six months of 1996 reflecting the implementation of
a PSCW rate order on February 21, 1997, which authorized a 2.7%
increase in gas revenues offset by a 3.7% decrease in heating degree
days.
Six Months
--------------------------
Gas Margins (000's) 1997 1996
- ------------------- ---- ----
Revenues $123,906 $118,644
Purchase costs 87,493 81,960
------- -------
Margins $ 36,413 $ 36,684
======= =======
Volume in therms (000) 385,366 381,421
The PSCW allows WPSC to pass changes in the cost of gas on to
customers through a purchased gas adjustment clause.
Gas operating revenues increased $5.3 million, or 4.4%, during the
first six months of 1997 compared to the same period in 1996. This
increase was due primarily to higher gas costs in the first quarter of
1997. Gas revenues also reflect the PSCW authorized rate increase of
2.7% and a one-time reduction of $.9 million in the first quarter
based on a PSCW directive related to a change in the accounting
treatment for previous customer line extensions.
Gas purchased for resale showed a net increase of $5.5 million, or
6.8%, in the first six months of 1997 as compared to the same period
in 1996 due primarily to increased gas costs in the first quarter of
1997.
NON-REGULATED OPERATIONS
Non-regulated energy and other operating revenues increased
$14.4 million, or 19.3%. The increase in non-regulated energy
revenues consisted largely of increased gas sales at ESI of
$8.7 million, or 11.7%, as a result of customer growth and higher
market prices for gas. ESI also had increased sales of $3.7 million
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<PAGE>
related to electric sales. In addition, other operating revenues
increased $1.8 million due to increased consulting activities at PDI.
Non-regulated energy cost of sales increased $12.1 million, or 16.2%,
due primarily to increased gas purchases and purchased power of
$8.3 million and $3.6 million, respectively, at ESI. Margins
increased at ESI in the first six months of 1997 compared to the same
period in 1996.
OTHER EXPENSES
Other operating expenses at the Company decreased $3.7 million, or
4.7%.
Other operating expenses at WPSC decreased $8.8 million, or 11.5%.
This decrease was due to lower customer service expenses of
$3.2 million, lower administrative expenses of $1.5 million due
primarily to reduced post-retirement medical and dental expenses, and
lower generation operating expenses of $3.9 million resulting from
completion in 1996 of the retail amortization related to a deferred
coal and rail contract settlement.
Other operating expenses at ESI increased $2.2 million, or 106.2%, due
to expansion of the business.
Other operating expenses at PDI increased $2.0 million as a result of
expansion of the business and initial operation of the
Stoneman Power Plant. Other operating expenses also increased at the
Company.
Depreciation and decommissioning expenses increased $5.1 million, or
15.7%, largely due to the accelerated recovery of investment in
Kewaunee and accelerated funding of Kewaunee decommissioning costs.
Other income increased $3.6 million, or 111.8% due primarily to gains
on sales of non-utility property at WPSC which represented
approximately $.07 per share.
Income tax expense decreased $3.5 million due primarily to lower
earnings.
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<PAGE>
FINANCIAL CONDITION
Most of the Company's capital expenditures relate to WPSC's
construction expenditures. WPSC requires large investments in capital
assets used to deliver electric and gas services. WPSC maintains good
liquidity levels and a financial condition considered to be strong by
utility analysts. Internally generated funds exceeded WPSC's cash
requirements resulting in the reduction of short-term borrowings
during the first six months of 1997. No funding difficulties are
anticipated in the future. Pretax interest coverage was 3.25 times
for the 12 months ended June 30, 1997 for the Company and 4.14 times
for WPSC.
WPSC's bond ratings are AA+ (Standard & Poor's and Duff & Phelps) and
Aa2 (Moody's).
For the three-year period 1997 to 1999, internally generated funds
will provide all but $97.0 million of WPSC's $450.0 million in
construction expenditures and other investments. These expenditures
are comprised of $175.0 million for electric construction,
$29.0 million for nuclear fuel, $125.0 million for gas construction,
$57.0 million for other construction expenditures, and $64.0 million
for nuclear decommissioning. WPSC currently expects to finance any
shortfall in internally generated funds through short-term debt,
long-term debt, and common equity from the Company.
Anticipated investment expenditures for non-regulated subsidiaries
could be as high as $112.0 million for the three-year period 1997 to
1999 if projects develop as forecasted. Project non-recourse
financings will be pursued.
Effective March 20, 1997, WPSC received authorization from the PSCW to
begin deferring all costs associated with the repair of the Kewaunee
steam generators. The joint owners of Kewaunee will be requesting
rate recovery of these deferred costs in a future proceeding.
Approximately $2.5 million (WPSC's portion) has been deferred through
June 30, 1997. Repairs are complete, and Kewaunee returned to
operation in mid-June of 1997. The apparent success of these repairs
offers WPSC an option to the replacement of Kewaunee's steam
generators. WPSC has proposed replacing the steam generators and is
seeking approval from the PSCW for replacement in 1999. WPSC is not
withdrawing the steam generator replacement proposal at this time, but
will be reviewing economic analyses considering the success of the
newly developed repair process.
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<PAGE>
Some areas of Wisconsin and the Upper Midwest region will be facing
unusual electric supply challenges over the next few months. Several
nuclear plants in Wisconsin and Illinois are temporarily out of
service due to a series of maintenance outages. Wisconsin utilities
are working together with the PSCW to assure adequate power supplies.
On July 1, 1997, the PSCW authorized WPSC to defer all advertising
costs associated with developing a communication plan to educate
customers on the potential energy shortage. WPSC was also authorized
to defer all costs related to returning its fossil fuel plant, Pulliam
Unit 3, to service and all subsequent operating costs for Pulliam
Unit 3. The recovery of these deferred costs will be considered in a
future rate proceeding. Expenditures to date have been minimal and no
deferrals for these items have yet been recorded.
WPSC filed an application proposing a $.00082 per Kwh increase to
electric retail rates with the PSCW on July 3, 1997. WPSC's fuel
costs exceeded the costs provided for under the fuel rules which allow
rate filings to recover these additional costs. WPSC has requested
the PSCW to issue an order in August of 1997.
In the first quarter of 1997, WPSC received a portion of the
$12.0 million manufactured gas plant remediation insurance settlements
that it anticipates to receive in 1997. Insurance recoveries are
being deferred and will offset future remediation costs as the PSCW
prescribes in future rate proceedings.
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<PAGE>
<PAGE>
Part II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Proxy voting results for the election of three directors to the
Company's Board at the May 1, 1997 Annual Shareholders' Meeting are as
follows:
For Abstentions Non-Votes Total
---------- ----------- --------- ----------
Michael S. Ariens 21,440,652 433,731 2,022,579 23,896,962
Kathryn M.
Hasselblad-Pascale 21,443,004 431,379 2,022,579 23,896,962
Larry L. Weyers 21,453,009 420,397 2,023,556 23,896,962
The following directors also continued in office after the Annual
Shareholders' Meeting:
A. Dean Arganbright
Richard A. Bemis
Daniel A. Bollom
Sister M. Lois Bush
Robert C. Gallagher
James L. Kemerling
ITEM 5. OTHER INFORMATION
WPS RESOURCES CORPORATION - UPPER PENINSULA ENERGY CORPORATION MERGER
WPS Resources Corporation ("WPSR") and Upper Peninsula Energy
Corporation ("UPEN") announced on July 10, 1997 that they have entered
into an Agreement and Plan of Merger pursuant to which UPEN will merge
with and into WPSR. The transaction will be structured as a tax-free,
stock-for-stock exchange. Pursuant to the merger agreement, holders
of UPEN common stock will receive 0.9 shares of WPSR common stock for
each share of UPEN common stock owned.
The merger is subject to (i) approval by the shareholders of UPEN;
(ii) approval by the Federal Energy Regulatory Commission; (iii) the
Form S-4 Registration Statement of WPSR being declared effective by
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<PAGE>
the Securities and Exchange Commission;(iv) expiration or termination
of the waiting period applicable to the merger under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976; (v) receipt by
the parties of an opinion of counsel that the exchange of stock
qualifies as a tax-free transaction; (vi) receipt by the parties of
appropriate assurances that the transaction will be accounted for as a
pooling of interests; and (vii) the satisfaction of various other
conditions.
The merger is expected to be completed in 1998 at which time UPEN will
be merged with and into WPSR and the Upper Peninsula Power Company,
UPEN's utility subsidiary, will become a wholly-owned subsidiary of
WPSR. At the same time, the Board of Directors of WPSR will be
expanded from nine to ten members to include one director nominated by
UPEN.
KEWAUNEE NUCLEAR POWER PLANT STEAM GENERATOR STRATEGY
The Kewaunee Nuclear Power Plant ("Kewaunee") returned to service on
June 12, 1997 after having been out of service since September 21,
1997 for routine maintenance and repair of steam generators. Kewaunee
is jointly owned by Wisconsin Public Service Corporation, Wisconsin
Power and Light Company, and Madison Gas and Electric Company.
Kewaunee is operated by Wisconsin Public Service Corporation ("WPSC"),
the utility subsidiary of WPSR.
WPSC has proposed replacing the two steam generators at Kewaunee and
is seeking permission from the Public Service Commission of Wisconsin
("PSCW") to undertake the replacement work in 1999. WPSC will not be
withdrawing the replacement proposal at this time, but will use the
time provided by the apparent success of the steam generator repairs
to assess future alternatives with respect to a steam generator
strategy. This evaluation of an alternative course of action is
particularly appropriate in light of the uncertainties inherent in
utility industry restructuring, the continuing ownership discussions
between the Kewaunee owners, the success of the recent repairs, and
information to be gained from the next inspection of the steam
generators at the time of the next shutdown which is scheduled for the
fall of 1998.
The availability of steam generator resleeving as a future repair
option does not mean that the steam generators will not be replaced
sometime in the future. At this time, it is felt that the resleeving
alternative must be evaluated very carefully along with other
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<PAGE>
alternatives before making any decisions with respect to the future of
the current steam generators.
Background information regarding Kewaunee steam generator repair
problems is set forth in the registrants' Annual Report on Form 10-K
for the year ended December 31, 1996, Current Report on Form 8-K dated
March 10, 1997, Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1997, and Current Report on Form 8-K dated
June 7, 1997.
SUMMER ELECTRIC ENERGY SUPPLY
Should the upper Midwest region of the United States experience
extended periods of hot weather, widespread damaging storms, or
unusual generating plant or transmission system constraints during the
summer of 1997, the state of Wisconsin could potentially experience
electricity shortages. At its open meeting on April 24, 1997, the
PSCW approved an electric system reliability emergency plan that would
be implemented should such circumstances occur. The plan requires
that the eastern Wisconsin utilities, including WPSC, share their
capacity reserves in time of emergency. Major nuclear generating
units have been or are out of service in Illinois, Minnesota, and
Wisconsin. Wisconsin routinely imports about 15% of its electricity
from other states. Due to transmission system constraints, the
eastern and central sections of the state of Wisconsin would most
likely be affected by electricity shortages. WPSC and other members
of the Wisconsin Reliability Assessment Group, consisting of seven
public utilities, are working with the PSCW, other government
agencies, large industrial customers, and other groups in an attempt
to mitigate the impact of potential electric system reliability
problems. The return of the Kewaunee Nuclear Power Plant to service
on June 12, 1997 significantly increased the amount of generation
available during the summer of 1997, but the potential for shortages
still exists.
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<PAGE>
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
The following documents are filed herewith:
Exhibit 10.5 Deferred Compensation Plan
WPS Resources Corporation
Exhibit 10.6 Executive Employment and Severance
Agreement
WPS Resources 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
(b) REPORT ON FORM 8-K
A current report on Form 8-K dated June 7, 1997
reporting on the return to service of the
Kewaunee Nuclear Power Plant.
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: July 25, 1997 /s/ Diane Ford
________________________________
D. L. Ford
Controller and Chief
Accounting Officer
(Duly Authorized Officer and
Chief Accounting Officer)
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<PAGE>
<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: July 25, 1997 /s/ Diane 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 JUNE 30, 1997
Exhibit No. Description
___________ ___________
10.5 Deferred Compensation Plan
WPS Resources Corporation
10.6 Executive Employment and Severance Agreement
WPS Resources 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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<PAGE>
EXHIBIT 10.5
WPS RESOURCES CORPORATION
DEFERRED COMPENSATION PLAN
As Amended and Restated Effective January 1, 1997
PAGE
<PAGE>
WPS RESOURCES CORPORATION
DEFERRED COMPENSATION PLAN
WPS Resources Corporation Deferred Compensation Plan
(the "Plan") has been established effective January 1, 1996 to
promote the best interests of WPS Resources Corporation (the
"Company") and the stockholders of the Company by (1) attracting
and retaining well-qualified persons for service as non-employee
directors of the Company and designated subsidiaries or
affiliates; and (2) attracting and retaining key management
employees possessing a strong interest in the successful
operation of the Company and its subsidiaries or affiliates and
encouraging their continued loyalty, service and counsel to the
Company and its subsidiaries or affiliates. This Plan replaces
Deferred Compensation Plans 008, 009, 010 and 011 previously
maintained by the Wisconsin Public Service Corporation.
<PAGE>
<PAGE>
ARTICLE I. DEFINITIONS AND CONSTRUCTION
Section 1.011. Definitions. The following terms have the
---------------------------
meanings indicated below unless the context in which the term is
used clearly indicates otherwise:
(a) "Account" means the record keeping account or accounts
maintained by a Participating Employer for each Participant,
including to extent applicable to any such Participant, Reserve
Account A, Reserve Account B and the Stock Account.
(b) "Beneficiary" means the person or entity designated by
the Participant to be his beneficiary for purposes of this Plan.
If a valid designation of Beneficiary is not in effect at time of
the death of a Participant, the estate of the Participant is
deemed to be the sole Beneficiary. If a Beneficiary dies while
entitled to receive distributions from the Plan, any remaining
payments shall be paid to the estate of the Beneficiary.
Beneficiary designations shall be in writing, filed with the
Secretary, and in such form as the Secretary may prescribe for
this purpose.
(c) "Board" means the Board of Directors of the Company.
(d) "Change of Control" means any of the following events:
(i) The shareholders of the Company approve a
definitive agreement to merge or consolidate
the Company or Wisconsin Public Service
Corporation with or into another corporation
in a transaction in which neither the Company
nor any of its subsidiaries will be the
surviving corporation, or to sell or
otherwise dispose of all or substantially all
of the Company's assets (or the assets of
Wisconsin Public Service Corporation) to any
corporation, person, other entity or group
(other than the Company or any of its
subsidiaries);
(ii) any corporation, person, other entity or
group (other than the Company or any of its
subsidiaries or the Wisconsin Public Service
Corporation Employee Stock Ownership Plan and
Trust or the WPS Resources Corporation
Deferred Compensation Trust) becomes the
beneficial owner of stock representing
fifteen percent (15%) or more of the voting
power of the Company's or Wisconsin Public
Service Corporation's then outstanding
securities)
(iii) during any period of two (2) consecutive
years, individuals who at the beginning
of such period were members of the Board
together with members of the Board whose
election by the Board or nomination for
election by the Company's shareholders
was approved by a vote of at least two-thirds
(2/3) of the directors then
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<PAGE>
still in office, cease for any reason to
constitute at least a majority of the Board;
(iv) there is a loss of fifteen percent (15%) or
more of the customers of Wisconsin Public
Service Corporation as a consequence of the
exercise of statutorily granted condemnation
powers by any governmental entity.
(e) "Company" means WPS Resources Corporation, a Wisconsin
corporation, or any successor corporation.
(f) "Compensation" means (i) for a Director, the Retainer
Fee and (ii) for an Executive the base monthly salary or wage
payable by a Participating Employer for services performed,
including elective contributions to a Section 125, 129 or 401(k)
arrangement or Voluntary Deferrals to this Plan, but excluding
extraordinary payments such as overtime, bonuses, meal
allowances, reimbursed expenses, termination pay, moving pay,
commuting expenses, Mandatory Deferrals to this Plan or other
non-elective deferred compensation payments or accruals, stock
options, the value of employer-provided fringe benefits or
coverage, and any contributions on behalf of the Executive paid
by a Participating Employer to a survivor's income benefit plan
or any other employee benefit plan within the meaning of ERISA,
all determined in accordance with such uniform rules, regulations
or standards as may be prescribed by the Compensation Committee.
(g) "Compensation Committee" means the Compensation
Committee of the Board, which functions as the joint Compensation
Committee for the Company and for Wisconsin Public Service
Corporation.
(h) "Code" means the Internal Revenue Code of 1986, as
interpreted by regulations and rulings issued pursuant thereto,
all as amended and in effect from time to time.
(i) "Director" means a non-employee director of a
Participating Employer who has been designated by the
Compensation Committee as covered under or being eligible to
participate in the Plan.
(j) "ERISA" means the Employee Retirement Income Security
Act of 1974, as interpreted by regulations and rulings issued
pursuant thereto, all as amended and in effect from time to time.
(k) "Executive" means a common law employee of a
Participating Employer who has been designated by the
Compensation Committee as covered under or otherwise being
eligible to participate in this Plan.
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<PAGE>
(l) "Mandatory Deferral" means the amount which may from
time to time be credited to the Stock Account of an Executive in
accordance with Section 3.01 and for which the Executive does not
receive the option between receiving such amount as current cash
compensation and deferring such amount into the Plan.
(m) "Participant" means either a Director or Executive who
is participating in or eligible to participate in the Plan.
(n) "Participating Employer" means Company and any direct
or indirect subsidiary of the Company that, with the consent of
the Compensation Committee, adopts the Plan for the benefit of
one or more Executives or Directors.
(o) "Retainer Fee" means those fees paid by a Participating
Employer to non-employee directors for services rendered on the
Board or any committee of the Board, or for service on the board
of directors of a subsidiary or affiliate, including attendance
fees and fees for serving as committee chair.
(p) "Secretary" means the Secretary of the Company (or his
delegate).
(q) "Trust" means the WPS Resources Corporation Deferred
Compensation Trust or other funding vehicle which may from time
to time be established, as amended and in effect from time to
time.
(r) "Voluntary Deferrals" mean amounts credited, in
accordance with a Participant's election, to his Account in lieu
of the payment of an equal amount of current Compensation.
(s) "WPS Resources Stock" means the common stock, $1.00 par
value, of the Company.
(t) "WPS Resources Stock Units" means the hypothetical
shares of the common stock, $1.00 par value, of the Company, that
may be credited to the Stock Account of an Executive as a result
of Mandatory Deferrals or the Stock Account of either a Director
or Executive as a result of Voluntary Deferrals.
Section 1.012. Construction and Applicable Law. (a)
-----------------------------------------------
Wherever any words are used in the masculine, they shall be
construed as though they were used in the feminine in all cases
where they would so apply; and wherever any words are use in the
singular or the plural, they shall be construed as though they
were used in the plural or the singular, as the case may be, in
all cases where they would so apply. Titles of articles and
sections are for general information only, and the Plan is not to
be construed by reference to such items.
(b) This Plan, as applied to Executives, is intended to be
a plan of deferred compensation maintained for a select group of
management or highly compensated employees as
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<PAGE>
that term is used in ERISA, and shall be interpreted so as to comply
with the applicable requirements thereof. In all other respects, the
Plan is to be construed and its validity determined according to the
laws of the State of Wisconsin to the extent such laws are not
preempted by federal law. In case any provision of the Plan is
held illegal or invalid for any reason, the illegality or
invalidity will not affect the remaining parts of the Plan, but
the Plan shall, to the extent possible, be construed and enforced
as if the illegal or invalid provision had never been inserted.
-5-
<PAGE>
<PAGE>
ARTICLE II. PLAN ACCOUNTS
Section 1.021. Establishment of Accounts. One or more of
-----------------------------------------
the following Accounts will be established in the name of each
Participant who is identified in Schedule A (as from time to time
amended by the Compensation Committee) to reflect that
Participant's interest in the Plan:
(a) Reserve Account A
(b) Reserve Account B
(c) Stock Account
Section 1.022. Reserve Account A. (a) This Account will
---------------------------------
be credited with the reserve account balance accumulated by a
Participant as of December 31, 1995 under the prior deferred
compensation program of Wisconsin Public Service Corporation.
Except for attributed earnings as described below, no further
"contributions" or credits of any kind will be made to this
Account on behalf of a Participant.
(b) As of the end of each Plan Year, the Account will be
credited with an interest equivalent on the balance in the
Account from time to time during the year. The annual interest
equivalent will be the sum (on a non-compounded basis) of the
attributed earnings for each month during the year based on the
Account balance as of the last day of the month. Unless modified
by the Compensation Committee, the interest equivalent rate for
any month will be the greater of:
(i) one-half of one percent (0.5%); or
(ii) one-twelfth (1/12) of the return on common
shareholders' equity (ROE). For the months
of April through September, ROE means the
consolidated return on equity of the Company
and all subsidiaries for the twelve (12)
months ended on the preceding March 31 as
calculated pursuant to the Company's standard
accounting procedure for financial reporting
to shareholders. For the months October
through March, ROE means return on equity as
described above for the twelve (12) months
ended on the preceding September 30.
(c) The Compensation Committee may revise the interest
equivalent rate described in Section 2.02(b) above or the manner
in which it is calculated, but in no event shall the rate be less
than six percent (6%) per annum. Any such revised rate shall be
effective with the calendar month following such action by the
Compensation Committee.
(d) Notwithstanding Section 2.02(b) and (c), in the event
of a Change in Control, the
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<PAGE>
minimum rate of interest equivalent shall be the greater of (A)
six percent (6%) per annum, or (B) for each month for which
attributed earnings are required to be calculated, a rate equal
to two (2) percentage points above the prime lending rate at
Firstar Bank Milwaukee, Milwaukee, Wisconsin as of the last
business day of that month.
Section 1.023. Reserve Account B. (a) This Account shall
---------------------------------
be credited with Voluntary Deferrals made after December 31, 1995
which a Participant elects to allocate to this Account in
accordance with Section 3.02(c)(ii).
(b) As of the end of each Plan Year, the Account will be
credited with an interest equivalent on the balance in the
Account from time to time during the year. The annual interest
equivalent will be the sum (on a non-compounded basis) of the
attributed earnings for each month during the year based on the
Account balance as of the last day of each month. Unless
modified by the Compensation Committee, the interest equivalent
rate for any month will be the greater of:
(i) one-half of one percent (0.5%); or
(ii) seventy percent (70%) of one-twelfth (1/12)
of the return on common shareholders equity
(ROE). For the months of April through
September, ROE means the consolidated return
on equity of the Company and all subsidiaries
for the twelve (12) months ended on the
preceding March 31 as calculated pursuant to
the Company's standard accounting procedure
for financial reporting to shareholders. For
the months October through March, ROE means
return on equity as described above for the
twelve (12) months ended on the preceding
September 30.
(c) The Compensation Committee may revise the interest
equivalent rate described in Section 2.03(b) above or the manner
in which it is calculated, but in no event shall the rate be less
than six percent (6%) per annum. Any such revised rate shall be
effective with the calendar month following such action by the
Compensation Committee.
(d) Notwithstanding Section 2.03(b) and (c), in the event
of a Change in Control, the minimum rate of interest equivalent
shall be the greater of (A) six (6%) per annum, or (B) for each
month for which attributed earnings are required to be
calculated, a rate equal to two (2) percentage points above the
prime lending rate at Firstar Bank Milwaukee, Milwaukee,
Wisconsin as of the last business day of that month.
Section 1.024. Stock Account. (a) This Account shall be
-----------------------------
credited with all Mandatory Deferrals made after December 31,
1995 and those Voluntary Deferrals made after December 31, 1995
which a Participant, in accordance with Section 3.02(c)(ii),
elects to allocate to this Account.
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<PAGE>
(b) As of the end of each month, all Voluntary and
Mandatory Deferrals made by or on behalf of a Participant during
that month and allocated to the Participant's Stock Account (the
"Convertible Amount") shall be converted, for record keeping
purposes, into whole and fractional WPS Resources Stock Units,
with fractional units calculated to four decimal places. The
conversion shall be accomplished by dividing each Participant's
Convertible Amount by the average purchase price of all shares of
WPS Resources Stock purchased during that month by or on behalf
of the Trust and the WPS Resources Corporation Stock Investment
Plan. Likewise, any dividends that would have been payable on
the WPS Resources Stock Units credited to a Participant's Stock
Account had such Units been actual shares of WPS Resources Stock
shall be converted, for record keeping purposes, into whole and
fractional WPS Resources Stock Units based on the average
purchase price of all shares of WPS Resources Stock purchased by
or on behalf of the Trust and the WPS Resources Corporation Stock
Investment Plan during the month in which the dividend is paid.
Section 1.025. Accounts are For Record keeping Purposes
--------------------------------------------------------
Only. The Plan Accounts described in this Article II above serve
- ----
solely as a device for determining the amount of benefits
accumulated by a Participant under the Plan, and shall not
constitute or imply an obligation on the part of a Participating
Employer to fund such benefits. In any event, the Company may,
in its discretion, set aside assets equal to part or all of such
account balances and invest such assets in Company stock, life
insurance or any other investment deemed appropriate. Any such
assets, including WPS Resources Stock and any other assets held
under the Trust, shall be and remain the sole property of the
Company and except to the extent that the Trust authorizes a
Participant to direct the trustee with respect to the voting of
WPS Resources Stock held in the Trust, a Participant shall have
no proprietary rights of any nature whatsoever with respect to
such assets.
-8-
<PAGE>
<PAGE>
ARTICLE III. MANDATORY AND VOLUNTARY DEFERRALS
Section 1.031. Mandatory Deferrals. The Compensation
-----------------------------------
Committee may, from time to time, authorize a Mandatory Deferral
to be made on behalf of covered Executives. The authorization of
any such contribution, the Executives entitled to the
contribution, and the amount to be credited to each eligible
Executive, shall be determined by the Compensation Committee in
its sole discretion; provided that the maximum Mandatory Deferral
for any year shall not exceed thirty percent (30%) of an
Executive's Compensation for the year. Any Mandatory Deferral
will be credited to an eligible Executive's Stock Account and
converted into WPS Resources Stock Units in accordance with
Section 2.04.
Section 1.032. Election to Make Voluntary Deferrals. (a)
----------------------------------------------------
A Participant may elect to make Voluntary Deferrals by submitting
a properly completed and signed election form to the Secretary on
or before December 20, 1995. If the Participant so elects,
Voluntary Deferrals will commence with respect to Compensation
earned by a Participant on or after January 1, 1996.
Notwithstanding the foregoing, if, as of January 1, 1996, the
Participant has in effect an election under the prior deferred
compensation program maintained by Wisconsin Public Service
Corporation and does not file an election with the Secretary in
accordance with this Section 3.02(a), the prior election shall be
deemed the Participant's initial election under this Plan.
(b) If a Director or Executive first becomes eligible to
participate in the Plan following the election period described
in Section 3.02(a) above (such as, for example, a Director who
commences service or an Executive who is newly designated by the
Compensation Committee as being eligible) the initial deferral
election may be made within thirty (30) days of the date that
such person first becomes eligible under the Plan, and shall be
effective with respect to Compensation earned by the Participant
in the month following the month during which the deferral
election is made.
(c) A Participant's election shall be in such form as the
Secretary may prescribe, and shall specify:
(i) The percentage or dollar amount of
Compensation to be deferred as a Voluntary
Deferral. A Director may elect to defer all
or any part of his Compensation, in whole
dollar amounts or in increments of one
percent (1%). An Executive may, without the
consent of the Compensation Committee, elect
to defer a portion of his Compensation, in
whole dollar amounts or in increments of one
percent (1%), provided that the amount or
percentage elected does not exceed thirty
percent (30%) of the Executive's
Compensation. An Executive may elect to
defer more than thirty percent (30%) of
Compensation only if the Compensation
Committee has approved the Executive's
specific deferral percentage or amount.
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<PAGE>
(ii) Whether the Voluntary Deferrals are to be
credited to the Participant's Reserve Account
(Reserve Account B) or the Participant's
Stock Account. If the Participant desires to
allocate Voluntary Deferrals to both his
Reserve and Stock Accounts, the election must
further specify the portion of the Voluntary
Deferrals, in whole dollar amounts or in
increments of one percent (1%), to be
allocated to each Account. Notwithstanding
anything to the contrary herein, Voluntary
Deferrals in excess of thirty percent (30%)
of an Executive's Compensation shall be
credited to Reserve Account B, and the
Executive's election under this Section
3.02(c)(ii) shall not apply to any such
amounts.
(d) An election shall be deemed made only when it is
received by the Secretary, and shall remain in effect until
modified by the Participant in accordance with Section 3.03 below
or otherwise revoked in accordance with Plan rules.
Section 1.033. Revision or Modification of Voluntary
-----------------------------------------------------
Deferral Election. (a) A Participant's initial election under
- -----------------
Section 3.02 (including an election not to make Voluntary
Deferrals) shall remain in effect from year to year unless
revised or modified by the Participant in accordance with this
Section 3.03 or otherwise revoked in accordance with Plan rules.
(b) A Participant may modify his then current election
(including an election not to make Voluntary Deferrals) by filing
a revised election form, properly completed and signed, with the
Secretary. The revised election will be effective with respect
to Compensation earned on and after the first day of the month
that is coincident with or next following the date on which it is
received by the Secretary.
(c) An election shall be deemed revised in accordance with
this Section 3.03 only when the revised election is received by
the Secretary, and once effective, the revised election shall
remain in effect until further revised in accordance with this
Section 3.03 or otherwise revoked in accordance with Plan rules.
Revised elections are prospectively effective with respect to
Compensation earned on or after the applicable effective date
described in Section 3.03(b) and (c) above. A revised election
does not operate to modify or otherwise reallocate the amounts
deferred prior to the effective date of the revised election.
Section 1.034. Involuntary Termination of Voluntary
----------------------------------------------------
Deferral Elections. A deferral election shall be automatically
- ------------------
revoked upon termination of service as a Director (in the case of
a Director) or termination of employment (in the case of an
Executive). In addition, an Executive's deferral election shall
terminate on the first day of the Plan Year following the date
that the Compensation Committee determines that the Executive is
no longer eligible to participate in the Plan, including any such
action that may be necessary in order for the Plan to qualify
under ERISA, with respect to Executive employees, as a plan of
deferred compensation for a select group of management or highly
compensated employees.
-10-
PAGE
<PAGE>
ARTICLE IV. DISTRIBUTION OF RESERVE ACCOUNT A,
RESERVE ACCOUNT B AND STOCK ACCOUNTS
Section 1.041. Distribution Election. (a) The
-------------------------------------
distribution election (if any) made by a Participant under the
prior deferred compensation program maintained by Wisconsin
Public Service Corporation shall be his distribution election
under this Plan unless and until modified in accordance with
Section 4.02 below.
(b) A new Participant shall, at the time he commences
participation in the Plan, make a distribution election with
respect to his Account. The election shall be in such form as
the Secretary may prescribe, and shall specify the distribution
commencement date, the distribution period, the method of
distributing earnings credited to the Account, and the
distribution method applicable following the Participant's death.
Any such election shall be consistent with the following rules
(or where the Participant fails to make a selection, in
accordance with the default rules set forth below):
(i) Distribution Commencement Date. Unless the
------------------------------
Participant has selected a later commencement
date, distribution of a Participant's
Accounts will commence within 60 days
following the end of the calendar year in
which occurs the Participant's retirement or
termination of employment or service. For
purposes of this Plan, a participating
Executive who is disabled shall be deemed to
have retired or terminated at the conclusion
of benefits under all disability income plans
sponsored by a Participating Employer or to
which a Participating Employer contributes.
Further, a participating Executive who ceases
employment with a Participating Employer in
connection with an early retirement
(reduction in force) program sponsored by the
Participating Employer shall, if a
participant in the Wisconsin Public Service
Administrative Employees Retirement Plan, be
deemed to have retired upon commencement of
retirement benefits under such plan.
(ii) Distribution Period. Distributions will be
-------------------
made in 1, 3, 6, 9, 12 or 15 annual
installments, as elected by the Participant.
(iii) Method of Calculating Annual Distribution Amount.
------------------------------------------------
Unless the Participant elects the Alternate
Distribution Method, the amount to be
distributed to the Participant each year
during the distribution period will be
determined under the Regular Distribution Method.
The Regular and Alternate Distribution Methods
are described in more detail in Section 4.03.
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<PAGE>
(iv) Distribution of Remaining Account Following
-------------------------------------------
Participant's Death. In the event of the
-------------------
Participant's death, the Participant's
remaining undistributed interest will be
distributed to the Beneficiary designated by
the Participant in either a single sum
payment or in installments, as elected by the
Participant. If the Participant has elected
that death benefits be paid in a single sum,
the payment shall be made no later than
March 1 following the calendar year in which
occurs the Participant's death. If the
Participant has elected that death benefits be
paid in installments, (A) any installments
previously commenced to the Participant shall
continue to the Beneficiary and (B) if installment
distributions had not commenced as of the
date of the Participant's death, payments
over the installment period elected by the
Participant shall commence to the Beneficiary
no later than March 1 following the calendar
year in which occurs the Participant's death.
(c) A distribution election shall be deemed made only when
it is received by the Secretary, and shall remain in effect until
modified by the Participant in accordance with Section 4.02 below
or otherwise revoked in accordance with Plan rules.
Section 1.042. Modified Distribution Election. A
----------------------------------------------
Participant may from time to time modify his distribution
election by filing a revised distribution election, properly
completed and signed, with the Secretary. However, a revised
distribution election will be given effect only if the
Participant remains employed by (or in the case of a Director,
continues service on the Board or the board of directors of a
Participating Employer) for twenty-four (24) consecutive months
following the date that the revised election is received by the
Secretary.
Section 1.043. Calculation of Annual Distribution Amount.
--------------------------------------------------------
(a) For any Participant whose retirement date was prior to
January 1, 1996, distribution will continue to be calculated
under the distribution method applicable to such Participant at
the time his distributions commenced under the terms of the prior
deferred compensation program maintained by Wisconsin Public
Service Corporation.
(b) For any Participant whose retirement date is after
December 31, 1995, unless the Participant has selected the
Alternate Distribution Option, the annual distribution amount
shall be separately calculated for the Participant's interest (if
any) in Reserve Account A, Reserve Account B and the Stock
Account.
(i) The annual distribution amount for Reserve
Account A and Reserve Account B shall be
determined by dividing the balance in each
Account as of January 1 of the year for which
the distribution is being made by the number
of installment payments remaining to be made
under the distribution period selected by the
Participant.
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<PAGE>
Distributions from Reserve Account A and Reserve
Account B shall be made in cash. The amount of
any distribution under this Section 4.03(b)(i) will
be charged pro-rata against the Participant's interest
in Reserve Account A and B.
(ii) The annual distribution amount for the Stock
Account shall be determined on a share basis
by dividing the number of WPS Resources Stock
Units credited to the Participant's Stock
Account as of January 1 of the year for which
the distribution is being made by the number
of installment payments remaining to be made
under the distribution period selected by the
Participant, and then rounding the quotient
obtained for all but the final installment to
the next lowest whole number of WPS Resources
Stock Units. The Committee will then
distribute to the Participant shares of WPS
Resources Stock and/or cash equal to the
annual distribution amount. For any portion
of the distribution that the Committee elects
to satisfy by making a cash payment to the
Participant, the cash payment shall be
determined by multiplying the annual
distribution amount (or the portion of the
annual distribution amount being satisfied in
cash) by the closing price of WPS Resources
Stock on January 21 of the year in which the
distribution is being made, as such share
price is reported in the Wall Street
Journal's New York Stock Exchange Composite
Transactions listing. If January 21 falls on
a Saturday, Sunday or holiday, the
calculation of the cash portion of the
distributions will be made based upon the
closing price as reported for the immediately
preceding business day.
(c) For any Participant whose retirement date is after
December 31, 1995 and who has selected the Alternate Distribution
Method, the annual distribution amount shall be separately
calculated for the Participant's interest (if any) in Reserve
Account A, Reserve Account B and the Stock Accounts of January 1
of the year in which distributions commence. The annual
distribution amounts, once calculated, shall not thereafter be
recalculated.
(i) For the year in which distribution commences,
the annual distribution amount for Reserve
Account A and Reserve Account B shall be
determined by dividing the balance in each
Account as of January 1 of the year in which
distribution commences by the number of
installment payments selected by the
Participant. For each succeeding
distribution year, the Participant shall be
entitled to a distribution equal to the
annual distribution amount calculated in
accordance with the preceding sentence, plus
all interest equivalent credited to the
Account during the preceding calendar
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<PAGE>
year. Distributions from Reserve Account A and
Reserve Account B shall be made in cash. The
amount of any distribution under this Section
4.03(c)(i) will be charged pro-rata against
the Participant's interest in Reserve Account
A and B.
(ii) For the year in which distribution commences,
the annual distribution amount for the Stock
Account shall be determined on a share basis
by dividing the number of WPS Resources Stock
Units credited to the Participant's Stock
Account as of January 1 of the year in which
distribution commences by the number of
installment payments selected by the
Participant, and then rounding the quotient
obtained for all but the final installment to
the next lowest whole number of WPS Resources
Stock Units. For each succeeding
distribution year, the Participant shall be
entitled to distribution of the number of WPS
Resources Stock Units determined in
accordance with the preceding sentence, plus
all additional WPS Resources Stock Units
credited to the Stock Account during the
preceding calendar year on account of the
assumed reinvestment of dividends,
disregarding for all but the final
installment any fractional WPS Resources
Stock Units. The Committee will then
distribute to the Participant shares of WPS
Resources Stock and/or cash equal to the
number of WPS Resources Stock Units required
to be distributed for that year. For any
portion of the distribution that the
Committee elects to satisfy by making a cash
payment to the Participant, the cash payment
shall be determined by multiplying the
distribution amount (or the portion of the
distribution amount being satisfied in cash)
by the closing price of WPS Resources Stock
on January 21 of the year in which the
distribution is being made, as such share
price is reported in the Wall Street
Journal's New York Stock Exchange Composite
Transactions listing. If January 21 falls on
a Saturday, Sunday or holiday, the
calculation of the cash portion of the
distributions will be made based upon the
closing price as reported for the immediately
preceding business day.
Section 1.044. Time of Distribution. WPS Resources Stock
------------------------------------
distributed to a Participant shall be distributed on January 22
(or if January 22 falls on a Saturday, Sunday or holiday, the
immediately following business day). For distribution and tax
reporting purposes, the value of WPS Resources Stock distributed
shall equal the number of shares distributed multiplied by the
closing price of WPS Resources Stock on January 21 (or if January
21 falls on a Saturday, Sunday or holiday, the immediately
preceding business day) of the year in which the distribution is
being made as reported in the Wall Street Journal's New York
Stock Exchange Composite Transaction
-14-
<PAGE>
listing. The cash portion of any distribution will be made no later
than March 1 of the year for which the distribution is being made.
Section 4.05. Other Distribution Rules. (a) Subject to
---------------------------------------
adjustment as provided in paragraph (c) of this Section 4.05, the
total number of authorized but previously unissued shares of WPS
Stock which may be distributed to Participants pursuant to the
Plan shall be one hundred thousand (100,000), which number shall
not be reduced by or as a result of (i) any cash distributions
pursuant to the Plan or (ii) the distribution to Participants
pursuant to the Plan of any outstanding shares of WPS Stock
purchased by or on behalf of the Trust.
(b) The amount actually distributed to the Participant will
be reduced by applicable income tax withholding. Unless the
Participant has made a contrary election, income tax on the
entire annual distribution amount will be withheld from the cash
portion of the distribution, and WPS Resources Stock will be used
to satisfy withholding obligations only to the extent that the
cash portion of the distribution is insufficient for this
purpose.
(c) In the event of any merger, reorganization,
consolidation, recapitalization, separation, liquidation, stock
dividend, split-up, share combination or other change in the
corporate structure of the Company or a Participating Employer
affecting WPS Stock, such adjustment shall be made in the number
and class of shares which may be distributed pursuant to the Plan
as may be determined to be appropriate and equitable by the
Compensation Committee in its sole discretion.
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<PAGE>
<PAGE>
ARTICLE V. SPECIAL DEATH BENEFIT FOR PARTICIPANTS
WHO DIE WHILE MAKING VOLUNTARY AND MANDATORY DEFERRALS
Section 1.051. Eligibility. If an Executive who is
--------------------------
identified in Schedule B (as from time to time amended by the
Compensation Committee) dies prior to attainment of age sixty-five
(65) and while employed by a Participating Employer, and if
at the time of the Executive's death Voluntary or Mandatory
Deferrals were being made by or on behalf of the Executive, then
a special death benefit shall be paid to the Executive's
Beneficiary. This special death benefit is in addition to any
other death benefit payable under the Plan.
Section 1.052. Calculation of Special Death Benefit Amount.
----------------------------------------------------------
The special death benefit shall be a amount equal to the sum of
the (a), (b), (c) and (d) below.
(a) The difference between (i) the amount of Voluntary and
Mandatory Deferrals that would have been made by or on behalf of
the Executive during the month in which occurs the Executive's
death, assuming, for this purpose that the Executive had lived,
and (ii) the amount of Voluntary and Mandatory Deferrals actually
made during such month;
(b) The product obtained by multiplying (i) the amount of
Voluntary and Mandatory Deferrals made by or on behalf of the
Executive during the month prior to the month in which occurs the
Executive's death, and (ii) the number of full calendar months,
inclusive, from the month following the month in which occurs the
Executive's death to the month preceding the month in which the
Executive would have attained age sixty-five (65) had he lived;
(c) In the event the Executive's birthday is other than the
first day of a calendar month, for the month in which the
Executive would have attained age sixty-five (65), the product
obtained by multiplying (i) the amount of Voluntary and Mandatory
Deferrals made by or on behalf of the Executive during the month
prior to the month in which occurs the Executive's death, and
(ii) a fraction, the numerator of which is the number of days in
such month prior to the Executive's sixty-fifth (65th) birthday
and the denominator of which is the total number of days in the
month;
(d) A projected earnings factor equal to the amount of
interest equivalent that would have accumulated on the amounts
described in (a), (b) and (c) above. The projected earnings
factor shall be calculated using the interest equivalent rate
that was in effect under Reserve Account B for the month prior to
the month in which occurs the Executive's death. The calculation
shall assume that the Voluntary and Mandatory Deferrals described
in (a), (b) and (c) above were credited to Reserve Account B on a
monthly basis assuming that the Executive had lived and continued
to make Voluntary and Mandatory Deferrals. The interest
equivalent shall be compounded in the same manner as the
Executive's actual Reserve Account balance, i.e., the annual
interest equivalent calculated as of the end of each Plan Year,
will be the sum (on a non-compounded basis) of the attributed
earnings for each month during the year based on the Account
balance as of the last day of the month.
-16-
<PAGE>
Section 1.053. Payment of Special Death Benefit. (a) The
------------------------------------------------
special death benefit calculated in accordance with Section 5.02
above shall be paid to the Executive's Beneficiary in fifteen
(15) annual installments, with the first installment commencing
within sixty (60) days of the Executive's death. The benefit
calculated under Section 5.02 is a fixed amount which does not
accrue earnings or interest equivalent on the undistributed
balance.
-17-
<PAGE>
<PAGE>
ARTICLE VI. SUPPLEMENTAL RETIREMENT BENEFIT
Section 1.061. Supplemental Retirement Benefit. In the
-----------------------------------------------
case of an Executive who is identified in Schedule C (as from
time to time amended by the Compensation Committee), the
Executive shall be entitled to a supplemental retirement benefit
if the Executive retires from the Participating Employer either:
(a) on or after attainment of age fifty-eight (58) or such
other early retirement age specified under the Wisconsin Public
Service Corporation Administrative Employees' Retirement Plan
(collectively, "early retirement age"); or
(b) prior to such early retirement age with the written
approval of the Compensation Committee.
Section 1.062. Amount of Supplemental Benefit. (a) An
---------------------------------------------
Executive who qualifies for the supplemental retirement benefit
under Section 6.01 above a monthly amount equal to the
"applicable percentage" of the Executive's "average monthly
compensation".
(b) The "applicable percentage" shall be twenty percent
(20%) in the case of an Executive identified in Part I of
Schedule C and ten percent (10%) in the case of a Participant
identified in Part II of Schedule C.
(c) The Executive's "average monthly compensation" is the
Executive's compensation", expressed on a monthly basis, during
whichever period of thirty-six (36) consecutive months of
employment produces the highest average. For this purpose,
"compensation" shall have the same meaning as under the Wisconsin
Public Service Corporation Administrative Employees' Retirement
Plan with the exception that (i) Voluntary Deferrals and
Mandatory Deferrals made by or on behalf of the Executive during
the relevant period will be included in the Executive's
compensation and (ii) the compensation limitation specified in
Section 401(a)(17) of the Internal Revenue Code shall not apply.
Section 1.063. Commencement and Duration of Supplemental
---------------------------------------------------------
Retirement Benefits. Monthly payments calculated in accordance
- -------------------
with Section 6.02 above will commence to the Executive with a
payment for the month following the month in which the Executive
retires and shall continue until the earlier to occur of (a) the
Executive's death, or (b) one hundred twenty (120) monthly
payments have been made.
Section 1.064. Death Prior to Receipt of 120 Monthly
----------------------------------------------------
Payments. If the Executive dies after retirement but before
- --------
receipt of 120 payments, shall receive the Participant's
surviving spouse monthly payments equal to fifty percent (50%) of
the amount of the benefit that was being paid to the Executive.
This benefit will commence with a payment for the month following
the month in which occurs the death of the Executive and shall
continue until the earlier to occur of
-18-
<PAGE>
(a) the month in which occurs the death of the surviving spouse, or
(b) a total of one hundred twenty (120) monthly payments have been
made to either the Executive or the surviving spouse.
Section 1.065. Death Prior to Retirement. If the Executive
-----------------------------------------
dies prior to retirement, the Participant's surviving spouse
shall receive monthly payments equal to fifty percent (50%) of
the amount that would have been paid to the Executive had he
lived, but calculated without assuming any salary increases.
This benefit will commence with a payment for the month following
the month in which occurs the death of the Executive and shall
continue until the earlier to occur of (a) the month in which
occurs the death of the surviving spouse, or (b) one hundred
twenty (120) monthly payments have been made.
Section 6.06. Special Rules Applicable Upon a Change in
--------------------------------------------------------
Control. In the event of a Change in Control, an Executive who
- -------
is identified in Schedule C shall become immediately vested in
the supplemental retirement benefit, whether or not the Executive
retires from the Company in accordance with the eligibility
conditions set forth in Section 6.01. The supplemental
retirement benefit shall commence to the Executive with a payment
for the month following the month in which the Executive retires
or otherwise terminates employment following the Change in
Control, and shall continue until the earlier to occur of (a) the
Executive's death, or (b) one hundred twenty (120) monthly
payments have been made. In the Executive dies prior to
receiving one hundred twenty (120) monthly payments, the
provisions of Section 6.04 shall apply.
-19-
<PAGE>
<PAGE>
ARTICLE VII. PROTECTION OF QUALIFIED RETIREMENT PLAN BENEFIT
Section 1.071. Retirement Plan Supplement. (a) In the case
-----------------------------------------
of an Executive who is identified on Schedule D ( as from time to
time amended by the Compensation Committee) and who participates
in the Wisconsin Public Service Corporation Administrative
Employees' Retirement Plan ("Retirement Plan"), a monthly benefit
shall be paid to the Executive during his lifetime, and if
applicable, to his surviving spouse following the Executive's
death, a monthly amount equal to the difference between:
(i) The monthly benefit that would have been
payable to or on behalf of the Participant
under the Retirement Plan had the
Participant's (A) compensation for Retirement
Plan purposes been calculated prior to
reduction for Voluntary and Mandatory
Deferrals made to this Plan and without
regard to the compensation limitation
described in Section 401(a)(17) of the Code,
and (B) benefit been calculated without
regard to the maximum benefit limitation
described in Section 415 of the Internal
Revenue Code; and
(ii) The monthly benefit actually payable to or on
behalf of the Executive under the Retirement
Plan.
(b) Payments under this Section 7.01 shall cease when all
benefits payable to or on behalf of the Executive under the
Retirement Plan are discontinued.
-20-
<PAGE>
<PAGE>
ARTICLE VIII. RULES WITH RESPECT TO WPS RESOURCES STOCK
AND WPS RESOURCES STOCK UNITS
Section 1.081. Transactions Affecting WPS Resources Stock.
---------------------------------------------------------
In the event of any merger, share exchange, reorganization,
consolidation, recapitalization, stock dividend, stock split or
other change in corporate structure affecting WPS Resources
Stock, appropriate adjustments shall be made to the WPS Resources
Stock Units (if any) credited to the Stock Account of each
Participant.
Section 1.082. No Shareholder Rights With Respect to WPS
---------------------------------------------------------
Resources Stock Units. Participants shall have no rights as a
- ---------------------
stockholder pertaining to WPS Resources Stock Units credited to
their Stock Account. No WPS Resources Stock Unit nor any right
or interest of a Participant under the Plan in any WPS Resources
Stock Unit may be assigned, encumbered, or transferred, except by
will or the laws of descent and distribution. The rights of a
Participant hereunder with respect to any WPS Resources Stock
Unit are exercisable during the Participant's lifetime only by
him or his guardian or legal representative.
-21-
<PAGE>
<PAGE>
ARTICLE IX. PARTICIPATING EMPLOYERS
Section 1.091. Responsibility for Benefits. Each
-------------------------------------------
Participating Employer shall be responsible for providing all
benefits under the Plan that became payable to a Participant who
is or was employed by (or serves or served on the board of
directors of) that Participating Employer. To the extent that a
Participant is or was employed by two or more Participating
Employers, each such Participating Employer shall be responsible
for providing the portion of the Participant's benefits accrued
while in the employ of that employer.
-22-
<PAGE>
<PAGE>
ARTICLE X. PROVISIONS
Section 1.101. Administration. The Compensation Committee
-----------------------------
shall administer and interpret the Plan and supervise preparation
of Participant elections, forms, and any amendments thereto. To
the extent necessary to comply with applicable conditions of Rule
16b-3, the Compensation Committee shall consist of not less than
two members of the Board, each of whom is also a director of
Parent and qualifies as a "non-employee director" for purposes of
Rule 16b-3. If at any time the Compensation Committee shall not
be in existence or not be composed of members of the Board who
qualify as "non-employee directors", then all determinations
affecting Participants who are subject to Section 16 of the
Securities Exchange Act of 1934 (the "Exchange Act") shall be
made by the full Board. The Board may, in its discretion,
delegate to the Secretary or another committee of the Board any
or all of the authority and responsibility of the Compensation
Committee with respect to participation by Participants other
than Participants who are subject to Section 16 of the Exchange
Act at the time any such delegated authority or responsibility is
exercised. Interpretation of the Plan shall be within the sole
discretion of the Compensation Committee and shall be final and
binding upon each Participant and Beneficiary. The Compensation
Committee, and the Secretary with respect to matters assigned to
him under this Plan or delegated to him by the Compensation
Committee, may adopt and modify rules and regulations relating to
the Plan as it deems necessary or advisable for the
administration of the Plan. If the Secretary shall also be a
Participant or Beneficiary, any determinations affecting the
Secretary's participation in the Plan shall be made by the
Compensation Committee.
Section 1.102. Compliance With Securities Exchange Act.
------------------------------------------------------
Transactions under the Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successor under the
Exchange Act. The Plan shall be administered by the Compensation
Committee so that transactions under the Plan will be exempt from
Section 16 of the Exchange Act pursuant to regulations and
interpretations issued from time to time by the Securities and
Exchange Commission.
Section 1.103. Participant Rights Unsecured. (a) The right
--------------------------------------------
of a Participant or his Beneficiary to receive a distribution
hereunder shall be an unsecured claim, and neither the
Participant nor any Beneficiary shall have any rights in or
against any amount credited to his Account or any other specific
assets of a Participating Employer. The right of a Participant
or Beneficiary to the payment of benefits under this Plan shall
not be assigned, encumbered, or transferred, except by will or
the laws of descent and distribution. The rights of a
Participant hereunder are exercisable during the Participant's
lifetime only by him or his guardian or legal representative.
(b) The Company may authorize the creation of a trust or
other arrangements to assist in meeting the obligations created
under the Plan. However, any liability to any person with
respect to the Plan shall be based solely upon any contractual
obligations that may be created pursuant to the Plan. No
obligation of a Participating Employer shall be deemed to be
secured by any pledge of, or other encumbrance on, any property
of a Participating Employer. Nothing
-23-
<PAGE>
contained in this Plan and no action taken pursuant to its terms shall
create or be construed to create a trust of any kind, or a fiduciary
relationship between a Participating Employer and any Participant
or Beneficiary, or any other person.
Section 1.104. Income Tax Withholding. Subject to Section
-------------------------------------
4.04(c), no later than the date as of which an amount first
becomes includible in the gross income of the Participant for
Federal income tax purposes, the Participant shall pay or make
arrangements satisfactory to the Compensation Committee regarding
the payment of, any Federal, state, local or foreign taxes of any
kind required by law to be withheld with respect to such amount.
Section 1.105. Establishment. Amendment or Termination of
----------------------------------------------------------
Plan. (a) The Plan will become effective on January l, 1996
- ----
subject to approval by a majority of the votes cast at a duly
held meeting of the Company's stockholders at which a quorum
representing a majority of all outstanding voting stock is,
either in person or by proxy, present and voting on the Plan.
(b) There shall be no time limit on the duration of the
Plan. The Board (or where specified herein, the Compensation
Committee) may, at any time, amend or terminate the Plan without
the consent of the Participants or Beneficiaries, provided,
however, that no amendment or termination may reduce any Account
balance accrued on behalf of a Participant based on deferrals
already made, or divest any Participant of rights to which he
would have been entitled if the Plan had been terminated
immediately prior to the effective date of such amendment. This
Section shall not, however, restrict the right of the Board to
cause all Accounts to be distributed in the event of Plan
termination.
Section 1.106. Administrative Expenses. Costs of
---------------------------------------
establishing and administering the Plan will be paid by the
Participating Employers.
Section 1.107. Effect on Other Employee Benefit Plans.
------------------------------------------------------
Voluntary and Mandatory Deferrals credited to a Participant's
Account under this Plan shall not be considered "compensation"
for the purpose of computing benefits under any qualified
retirement plan maintained by a Participating Employer, but shall
be considered compensation for welfare benefit plans, such as
life and disability insurance programs sponsored by a
Participating Employer.
Section 1.108. Successor and Assigns. This Plan shall be
------------------------------------
binding upon and inure to the benefit of the Company and
Participating Employers, their successors and assigns and the
Participants and their heirs, executors, administrators, and
legal representatives.
-24-
<PAGE>
EXHIBIT 10.6
EXECUTIVE EMPLOYMENT
AND SEVERANCE AGREEMENT
By and Between
WPS RESOURCES CORPORATION
and
_________________________
Dated as of May 2, 1997
<PAGE>
<PAGE>
Table of Contents
Section Page
- ------- ----
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . 2
(a) Act. . . . . . . . . . . . . . . . . . . . . . . . . 2
(b) Affiliate and Associate. . . . . . . . . . . . . . . 2
(c) Beneficial Owner . . . . . . . . . . . . . . . . . . 3
(d) Cause. . . . . . . . . . . . . . . . . . . . . . . . 4
(e) Change in Control of the Company . . . . . . . . . . 5
(f) Code . . . . . . . . . . . . . . . . . . . . . . . . 6
(g) Continuing Director. . . . . . . . . . . . . . . . . 6
(h) Covered Termination. . . . . . . . . . . . . . . . . 6
(i) Employment Period. . . . . . . . . . . . . . . . . . 6
(j) Good Reason. . . . . . . . . . . . . . . . . . . . . 7
(k) Normal Retirement Date . . . . . . . . . . . . . . . 8
(l) Person . . . . . . . . . . . . . . . . . . . . . . . 8
(m) Termination Date . . . . . . . . . . . . . . . . . . 8
2. Termination or Cancellation Prior to Change In Control. . 11
3. Employment Period . . . . . . . . . . . . . . . . . . . . 12
4. Duties. . . . . . . . . . . . . . . . . . . . . . . . . . 13
5. Compensation. . . . . . . . . . . . . . . . . . . . . . . 13
6. Annual Compensation Adjustments . . . . . . . . . . . . . 16
7. Termination For Cause or Without Good Reason. . . . . . . 17
8. Termination Giving Rise to a Termination Payment. . . . . 17
9. Payments Upon Termination . . . . . . . . . . . . . . . . 18
(a) Accrued Benefits . . . . . . . . . . . . . . . . . . 18
(b) Termination Payment. . . . . . . . . . . . . . . . . 19
10. Death . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11. Retirement. . . . . . . . . . . . . . . . . . . . . . . . 24
12. Termination for Disability. . . . . . . . . . . . . . . . 24
13. Termination Notice and Procedure. . . . . . . . . . . . . 25
14. Further Obligations of the Executive. . . . . . . . . . . 26
(a) Competition. . . . . . . . . . . . . . . . . . . . . 26
(b) Confidentiality. . . . . . . . . . . . . . . . . . . 27
15. Expenses and Interest . . . . . . . . . . . . . . . . . . 27
16. Payment Obligations Absolute. . . . . . . . . . . . . . . 28
17. Successors. . . . . . . . . . . . . . . . . . . . . . . . 28
18. Severability. . . . . . . . . . . . . . . . . . . . . . . 30
19. Amendment . . . . . . . . . . . . . . . . . . . . . . . . 30
20. Withholding . . . . . . . . . . . . . . . . . . . . . . . 30
21. Certain Rules of Construction . . . . . . . . . . . . . . 30
22. Governing Law; Resolution of Disputes . . . . . . . . . . 31
23. Notice. . . . . . . . . . . . . . . . . . . . . . . . . . 31
24. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . 32
25. Headings. . . . . . . . . . . . . . . . . . . . . . . . . 32
26. Appendix A. . . . . . . . . . . . . . . . . . . . . . . . 32
Appendix A --
Sections 280G and 4999 of the Internal Revenue
Code of 1986 as of September 15, 1996
[Appended for informational purposes only.]
PAGE
<PAGE>
EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT
--------------------------------------------
THIS AGREEMENT, made and entered into as of the 2nd day
of May, 1997, by and between WPS Resources Corporation, a Wisconsin
corporation (hereinafter referred to as the "Company"), and
_____________________ (hereinafter referred to as "Executive").
W I T N E S S E T H
WHEREAS, the Executive is employed by the Company and/or
a subsidiary of the Company (the "Employer") in a key executive
capacity and the Executive's services are valuable to the conduct
of the business of the Company;
WHEREAS, the Executive possesses intimate knowledge of
the business and affairs of the Company and has acquired certain
confidential information and data with respect to the Company;
WHEREAS, the Company desires to insure, insofar as
possible, that it will continue to have the benefit of the
Executive's services and to protect its confidential information
and goodwill;
WHEREAS, the Company recognizes that circumstances may
arise in which a change in control of the Company occurs, through
acquisition or otherwise, thereby causing current uncertainty about
the Executive's future employment with the Employer without regard
to the Executive's competence or past contributions, which
uncertainty may result in the loss of valuable services of the
Executive to the detriment of the Company and its shareholders,
even if such a change in control never does in fact occur, and the
Company and the Executive wish to provide reasonable security to
the Executive against changes in the Executive's relationship with
the Company in the event of certain changes in control;
<PAGE>
WHEREAS, the Company and the Executive are desirous that
any proposal for a change in control or acquisition of the Company
will be considered by the Executive objectively and with reference
only to the best interests of the Company and its shareholders; and
WHEREAS, the Executive will be in a better position to
consider the Company's best interests if the Executive is afforded
reasonable security, as provided in this Agreement, against altered
conditions of employment which could result from any such change in
control or acquisition.
NOW, THEREFORE, in consideration of the foregoing and of
the mutual covenants and agreements hereinafter set forth, the
parties hereto mutually covenant and agree as follows:
1. Definitions.
-----------
(a) Act. For purposes of this Agreement, the term "Act"
---
means the Securities Exchange Act of 1934, as amended.
(b) Affiliate and Associate. An "Affiliate" of, or a
-----------------------
person "affiliated" with, a specified person, is a person that
directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the
person specified and the term "Associate" used to indicate a
relationship with any person, means (1) any corporation or
organization (other than the registrant or a majority-owned
subsidiary of the registrant) of which such person is an officer or
partner or is, directly or indirectly, the beneficial owner of 10
percent or more of any class of equity securities, (2) any trust or
other estate in which such person has a substantial beneficial
interest or as to which such person serves as trustee or in a
similar
-2-
<PAGE>
fiduciary capacity, and (3) any relative or spouse of such
person, or any relative of such spouse, who has the same home as
such person or who is a director or officer of the registrant or
any of its parents or subsidiaries.
(c) Beneficial Owner. For purposes of this Agreement,
----------------
a Person shall be deemed to be the "Beneficial Owner" of any
securities:
(i) which such Person or any of such Person's
Affiliates or Associates has the right to acquire
(whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement,
arrangement or understanding, or upon the exercise of
conversion rights, exchange rights, rights, warrants or
options, or otherwise; provided, however, that a Person
-------- -------
shall not be deemed the Beneficial Owner of, or to
beneficially own, (A) securities tendered pursuant to a
tender or exchange offer made by or on behalf of such
Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase
or (B) securities issuable upon exercise of Rights
pursuant to the terms of the Company's Rights Agreement
with Firstar Trust Company, dated as of December 12,
1996, as amended from time to time (or any successor to
such Rights Agreement) at any time before the issuance of
such securities;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the
right to vote or dispose of or has "beneficial ownership"
of (as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Act), including pursuant
to any agreement, arrangement or understanding; provided,
--------
however, that a Person shall not be deemed the Beneficial
-------
-3-
<PAGE>
Owner of, or to beneficially own, any security under this
subparagraph (ii) as a result of an agreement,
arrangement or understanding to vote such security if the
agreement, arrangement or understanding: (A) arises
solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with,
the applicable rules and regulations under the Act and
(B) is not also then reportable on a Schedule 13D under
the Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or
any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding for the purpose
of acquiring, holding, voting (except pursuant to a
revocable proxy as described in Subsection 1(c) (ii)
above) or disposing of any voting securities of the
Company.
(d) Cause. "Cause" for termination by the Company of
-----
the Executive's employment in connection with a Change of Control
of the Company shall, for purposes of this Agreement, be limited to
(i) the engaging by the Executive in intentional conduct not taken
in good faith which has caused demonstrable and serious financial
injury to the Company, as evidenced by a determination in a binding
and final judgment, order or decree of a court or administrative
agency of competent jurisdiction, in effect after exhaustion or
lapse of all rights of appeal, in an action, suit or proceeding,
whether civil, criminal, administrative or investigative; (ii)
conviction of a felony (as evidenced by binding and final judgment,
order or decree of a court of competent jurisdiction, in effect
after exhaustion of all rights of appeal) which substantially
impairs the Executive's ability to perform his duties or
responsibilities; and (iii) continuing willful
-4-
<PAGE>
and unreasonable refusal by the Executive to perform the
Executive's duties or responsibilities (unless significantly
changed without the Executive's consent).
(e) Change in Control of the Company. For purposes of
--------------------------------
this Agreement, a Change in Control of the Company shall be deemed
to have occurred if:
(i) any Person (other than any employee benefit plan
of the Company or of any subsidiary of the Company, any
Person organized, appointed or established pursuant to
the terms of any such benefit plan or any trustee,
administrator or fiduciary of such a plan) is or becomes
the Beneficial Owner of securities of the Company
representing at least 30% of the combined voting power of
the Company's then outstanding securities;
(ii) one-half or more of the members of the Board
are not Continuing Directors;
(iii) there shall be consummated any merger,
consolidation, or reorganization of the Company with any
other corporation as a result of which less than 50% of
the outstanding voting securities of the surviving or
resulting entity are owned by the former shareholders of
the Company other than a shareholder who is an Affiliate
or Associate of any party to such consolidation or
merger;
(iv) there shall be consummated (x) any merger of
the Company or share exchange involving the Company in
which the Company is not the continuing or surviving
corporation other than a merger of the Company in which
each of the holders of the Company's Common Stock
immediately prior to the merger have the
-5-
<PAGE>
same proportionate ownership of common stock of the
surviving corporation immediately after the merger;
(v) there shall be consummated any sale, lease,
exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially
all, of the assets of the Company to a Person which is
not a wholly owned subsidiary of the Company; or
(vi) the shareholders of the Company approve any
plan or proposal for the liquidation or dissolution of
the Company.
(f) Code. For purposes of this Agreement, the term
----
"Code" means the Internal Revenue Code of 1986, including any
amendments thereto or successor tax codes thereof.
(g) Continuing Director. For purposes of this
-------------------
Agreement, the term "Continuing Director" means (i) any member of
the Board of Directors of the Company who was a member of such
Board on May 1, 1997, (ii) any successor of a Continuing Director
who is recommended to succeed a Continuing Director by a majority
of the Continuing Directors then on such Board and (iii) additional
directors elected by a majority of the Continuing Directors then on
such Board.
(h) Covered Termination. Subject to Section 2(b)
-------------------
hereof, for purposes of this Agreement, the term "Covered
Termination" means any termination of the Executive's employment
where the Termination Date is any date prior to the end of the
Employment Period.
(i) Employment Period. For purposes of this Agreement,
-----------------
the term "Employment Period" means a period commencing on the date
of a Change in Control of the Company, and ending at 11:59 p.m.
Central Time on the earlier of the third anniversary of such date
or the Executive's Normal Retirement Date.
-6-
<PAGE>
(j) Good Reason. For purposes of this Agreement, the
-----------
Executive shall have a "Good Reason" for termination of employment
in connection with a Change in Control of the Company in the event
of:
(i) any breach of this Agreement by the Company,
including specifically any breach by the Company of its
agreements contained in Sections 4, 5 or 6 hereof;
(ii) the removal of the Executive from, or any
failure to reelect or reappoint the Executive to, any of
the positions held with the Company or the Employer on
the date of the Change in Control of the Company or any
other positions with the Company or the Employer to which
the Executive shall thereafter be elected, appointed or
assigned, except in the event that such removal or
failure to reelect or reappoint relates to the
termination by the Company of the Executive's employment
for Cause or by reason of disability pursuant to Section
12 hereof;
(iii) a good faith determination by the Executive
that there has been a significant adverse change, without
the Executive's written consent, in the Executive's
working conditions or status with the Company or the
Employer from such working conditions or status in effect
during the 180-day period immediately prior to the Change
in Control of the Company, including but not limited to
(A) a significant change in the nature or scope of the
Executive's authority, powers, functions, duties or
responsibilities, or (B) a significant reduction in the
level of support services, staff, secretarial and other
assistance, office space and accoutrements; or
-7-
<PAGE>
(iv) failure by the Company to obtain the agreement
referred to in Section 17(a) hereof as provided therein.
(k) Normal Retirement Date. For purposes of this
----------------------
Agreement, the term "Normal Retirement Date" means the earlier of
(i) "Normal Retirement Date" as defined in the Wisconsin Public
Service Corporation Administrative Employees' Retirement Plan, or
any successor plan, as in effect on the date of the Change in
Control of the Company or (ii) such earlier retirement date chosen
by the Executive prior to the commencement of the Employment
Period.
(l) Person. For purposes of this Agreement, the term
------
"Person" shall mean any individual, firm, partnership, corporation
or other entity, including any successor (by merger or otherwise)
of such entity, or a group of any of the foregoing acting in
concert.
(m) Termination Date. For purposes of this Agreement,
----------------
except as otherwise provided in Section 10(b) and Section 17(a)
hereof, the term "Termination Date" means (i) if the Executive's
employment is terminated by the Executive's death, the date of
death; (ii) if the Executive's employment is terminated by reason
of voluntary early retirement, as agreed in writing by the Company
and the Executive, the date of such early retirement which is set
forth in such written agreement; (iii) if the Executive's
employment is terminated for purposes of this Agreement by reason
of disability pursuant to Section 12 hereof, the earlier of thirty
days after the Notice of Termination is given or one day prior to
the end of the Employment Period; (iv) if the Executive's
employment is terminated by the Executive voluntarily (other than
for Good Reason), the date the Notice of Termination is given; and
(v) if the Executive's employment is terminated by the Company
(other than by reason of disability pursuant to Section 12 hereof)
or
-8-
<PAGE>
by the Executive for Good Reason, the earlier of thirty days
after the Notice of Termination is given or one day prior to the
end of the Employment Period. Notwithstanding the foregoing,
(A) If termination is for Cause pursuant to Section
1(f)(iii) of this Agreement and if the Executive has cured the
conduct constituting such Cause as described by the Company in its
Notice of Termination within such thirty day or shorter period,
then the Executive's employment hereunder shall continue as if the
Company had not delivered its Notice of Termination.
(B) If the Company (or the Employer) shall give a Notice
of Termination for Cause or by reason of disability and the
Executive in good faith notifies the Company that a dispute exists
concerning the termination within the fifteen day period following
receipt thereof, then the Executive may elect to continue his
employment during such dispute, and the Termination Date shall be
determined under this paragraph. If the Executive so elects and it
is thereafter determined that Cause or disability (as the case may
be) did exist, the Termination Date shall be the earlier of (1) the
date on which the dispute is finally determined, either (x) by
mutual written agreement of the parties or (y) in accordance with
Section 22 hereof, (2) the date of the Executive's death, or (3)
one day prior to the end of the Employment Period. If the
Executive so elects and it is thereafter determined that Cause or
disability (as the case may be) did not exist, then the employment
of the Executive hereunder shall continue after such determination
as if the Company (of the Employer) had not delivered its Notice of
Termination and there shall be no Termination Date arising out of
such Notice. In either case, this Agreement continues, until the
Termination Date, if any, as if the Company (or the Employer) had
not delivered the Notice of Termination except that, if it is
finally determined that the Company (or the Employer) properly
-9-
<PAGE>
terminated the Executive for the reason asserted in the Notice of
Termination, the Executive shall in no case be entitled to a
Termination Payment (as hereinafter defined) arising out of events
occurring after the Company delivered its Notice of Termination.
(C) If the Executive shall in good faith give a Notice
of Termination for Good Reason and the Company (or the Employer)
notifies the Executive that a dispute exists concerning the
termination within the fifteen day period following receipt
thereof, then the Executive may elect to continue his employment
during such dispute and the Termination Date shall be determined
under this paragraph. If the Executive so elects and it is
thereafter determined that Good Reason did exist, the Termination
Date shall be the earliest of (l) the date on which the dispute is
finally determined, either (x) by mutual written agreement of the
parties or (y) in accordance with Section 22 hereof, (2) the date
of the Executive's death or (3) one day prior to the end of the
Employment Period. If the Executive so elects and it is thereafter
determined that Good Reason did not exist, then the employment of
the Executive hereunder shall continue after such determination as
if the Executive had not delivered the Notice of Termination
asserting Good Reason and there shall be no Termination Date
arising out of such Notice. In either case, this Agreement
continues, until the Termination Date, if any, as if the Executive
had not delivered the Notice of Termination except that, if it is
finally determined that Good Reason did exist, the Executive shall
in no case be denied the benefits described in Sections 8(b) and 9
hereof (including a Termination Payment) based on events occurring
after the Executive delivered his Notice of Termination.
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<PAGE>
(D) If an opinion is required to be delivered pursuant
to Section 9(b)(ii) hereof and such opinion shall not have been
delivered, the Termination Date shall be the earlier of the date on
which such opinion is delivered or one day prior to the end of the
Employment Period.
(E) Except as provided in Paragraph (B) above, if the
party receiving the Notice of Termination notifies the other party
that a dispute exists concerning the termination within the
appropriate period following receipt thereof and it is finally
determined that the reason asserted in such Notice of Termination
did not exist, then (1) if such Notice was delivered by the
Executive, the Executive will be deemed to have voluntarily
terminated his employment and the Termination Date shall be the
earlier of the date fifteen days after the Notice of Termination is
given or one day prior to the end of the Employment Period and (2)
if delivered by the Company, the Company will be deemed to have
terminated the Executive other than by reason of death, disability
or Cause.
2. Termination or Cancellation Prior to Change in
----------------------------------------------
Control.
- -------
(a) Subject to Subsection 2(b) hereof, the Company (and
the Employer) and the Executive shall each retain the right to
terminate the employment of the Executive or terminate and cancel
this Agreement at any time prior to a Change in Control of the
Company. Subject to Subsection 2(b) hereof, in the event the
Executive's employment is terminated by the Company (or the
Employer) prior to a Change in Control of the Company, this
Agreement shall be terminated and cancelled and of no further force
and effect, and any and all rights and obligations of the parties
hereunder shall cease. In the event the Executive's employment is
terminated by the Executive prior to a Change in Control of the
Company, except for obligations of the Executive in Section 14(b)
hereof which shall survive such termination, this Agreement shall
be
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<PAGE>
terminated and cancelled and of no further force and effect and
any and all rights and obligations of the parties except those in
Section 14 shall cease.
(b) Anything in this Agreement to the contrary
notwithstanding, if a Change in Control of the Company shall occur
and if the Executive's employment with the Company or a subsidiary
of the Company shall have been terminated (other than a termination
due to the Executive's death or as a result of the Executive's
disability) or if this Agreement shall have been otherwise
terminated and cancelled by the Company during the period of 180
days prior to the date on which the Change in Control of the
Company shall occur, then for all purposes of this Agreement such
termination of employment shall be deemed a "Covered Termination"
and any such termination and cancellation of this Agreement unless
effected in the manner specified in Section 19 hereof, shall be
null and void unless it shall be reasonably demonstrated by the
Company that such termination of employment or termination and
cancellation of this Agreement (i) shall not have been at the
request of a third party who had taken steps reasonably calculated
to effect a Change in Control of the Company or (ii) shall not
otherwise have arisen in connection with or in anticipation of a
Change in Control of the Company.
3. Employment Period. If a Change in Control of the
-----------------
Company occurs when the Executive is employed by the Company or a
subsidiary of the Company, the Company will, or will cause the
Employer to, continue thereafter to employ the Executive during the
Employment Period, and the Executive will remain in the employ of
the Employer in accordance with and subject to the terms and
provisions of this Agreement. Any termination of the Executive's
employment during the Employment Period, whether by the Company or
the Employer, shall be deemed a termination by the Company for
purposes of this Agreement.
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<PAGE>
4. Duties. During the Employment Period, the Executive
------
shall, in the same capacities and positions held by the Executive
at the time of the Change in Control of the Company or in such
other capacities and positions as may be agreed to by the Company
and the Executive in writing, devote the Executive's best efforts
and all of the Executive's business time, attention and skill to
the business and affairs of the Employer, as such business and
affairs now exist and as they may hereafter be conducted. The
services which are to be performed by the Executive hereunder are
to be rendered in the same metropolitan area in which the Executive
was employed during the 180-day period prior to the time of such
Change in Control of the Company, or in such other place or places
as shall be mutually agreed upon in writing by the Executive and
the Company from time to time. Without the Executive's consent the
Executive shall not be required to be absent from such metropolitan
area more than 45 days in any fiscal year of the Company.
5. Compensation. During the Employment Period, the
------------
Executive shall be compensated as follows:
(a) The Executive shall receive, at reasonable intervals
(but not less often than monthly) and in accordance with such
standard policies as may be in effect immediately prior to the
Change in Control of the Company, an annual base salary in cash
equivalent of not less than the Executive's highest annual base
salary as in effect during the 180-day period immediately prior to
the Change in Control of the Company (which base salary shall,
unless otherwise agreed in writing by the Executive, include the
current receipt by the Executive of any amounts which, prior to the
Change in Control of the Company, the Executive had elected to
defer, whether such
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<PAGE>
compensation is deferred under Section 401(k) of the Code or
otherwise), subject to adjustment as hereinafter provided.
(b) The Executive shall receive fringe benefits at least
equal in value to those provided for the Executive at any time
during the 180-day period immediately prior to the Change in
Control of the Company or, if more favorable to the Executive,
those provided generally at any time during the Employment Period
to executives of the Company (or the Employer) of comparable status
and position to the Executive. The Executive shall be reimbursed,
at such intervals and in accordance with such standard policies
that are most favorable to the Executive in effect at any time
during the 180-day period immediately prior to the Change in
Control of the Company or, if more favorable to the Executive,
those provided generally at any time during the Employment Period
to executives of the Company (or the Employer) of comparable status
and position to the Executive, for any and all monies advanced in
connection with the Executive's employment for reasonable and
necessary expenses incurred by the Executive on behalf of the
Company, including travel expenses.
(c) The Executive shall be included, to the extent
eligible thereunder (which eligibility shall not be conditioned on
the Executive's salary grade or on any other requirement which
excludes persons of comparable status to the Executive unless such
exclusion was in effect for such plan or an equivalent plan
immediately prior to the Change in Control of the Company), in any
and all plans providing benefits for the Employer's salaried
employees in general, including but not limited to group life
insurance, hospitalization, medical, dental, profit sharing and
stock bonus plans; provided, that, in no event shall the aggregate
-------- ----
level of benefits under such plans in which the Executive is
included be less than the aggregate level of benefits under plans
of the
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<PAGE>
Company of the type referred to in this Section 5(c) in which the
Executive was participating at any time during the 180-day period
immediately prior to the Change in Control of the
Company.
(d) The Executive shall annually be entitled to not less
than the amount of paid vacation and not fewer than the number of
paid holidays to which the Executive was entitled annually at any
time during the 180-day period immediately prior to the Change in
Control of the Company or such greater amount of paid vacation and
number of paid holidays as may be made available annually to other
executives of the Company (or the Employer) of comparable status
and position to the Executive.
(e) The Executive shall be included in all plans
providing additional benefits to executives of the Company of
comparable status and position to the Executive, including but not
limited to deferred compensation, split-dollar life insurance,
supplemental retirement, stock option, stock appreciation, stock
bonus and similar or comparable plans; provided, that, in no event
-------- ----
shall the aggregate level of benefits under such plans be less than
the aggregate level of benefits under plans of the Company of the
type referred to in this Section 5(e) in which the Executive was
participating at any time during the 180-day period immediately
prior to the Change in Control of the Company; and provided,
--------
further, that the Company's obligation to include the Executive in
- -------
bonus or incentive compensation plans shall be determined by
Subsection 5(f) hereof.
(f) To assure that the Executive will have an
opportunity to earn incentive compensation after a Change in
Control of the Company, the Executive shall be included in any
bonus plan of the Company or the Employer which shall satisfy the
standards described below (such plan, the "Bonus Plan") if the
Executive was participating in a bonus plan or plans of the
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<PAGE>
Company or the Employer in effect at any time during the 180-day
period immediately prior to the Change in Control of the Company.
Bonuses under any such Bonus Plan shall be payable with respect to
achieving such financial or other goals reasonably related to the
business of the Company or the Employer as the Company or the
Employer shall establish (the "Goals"), all of which Goals shall be
attainable, prior to the end of the Employment Period, with
approximately the same degree of probability as the goals under any
bonus plan or plans of the Company or the Employer as in effect at
any time during the 180-day period immediately prior to the Change
in Control of the Company (whether one or more, the "Prior Bonus
Plan") and in view of the Company's or the Employer's existing and
projected financial and business circumstances applicable at the
time. The amount of the bonus (the "Bonus Amount") that the
Executive is eligible to earn under any such Bonus Plan shall be no
less than the amount of the Executive's maximum award provided in
such Prior Bonus Plan (such bonus amount herein referred to as the
"Targeted Bonus"), and in the event the Goals are not achieved such
that the entire Targeted Bonus is not payable, any such Bonus Plan
shall provide for a payment of a Bonus Amount equal to a portion of
the Targeted Bonus reasonably related to that portion of the Goals
which were achieved. Payment of the Bonus Amount shall not be
affected by any circumstance occurring subsequent to the end of the
Employment Period, including termination of the Executive's
employment.
6. Annual Compensation Adjustments. During the
-------------------------------
Employment Period, the Board of Directors of the Company or the
Employer (or an appropriate committee thereof) will consider and
appraise, at least annually, the contributions of the Executive to
the Company, and in accordance with the Company's or the Employer's
practice prior to the Change in Control of
-16-
<PAGE>
the Company, due consideration shall be given to the upward adjustment
of the Executive's base compensation rate, at least annually,
(i) commensurate with increases generally given to other executives of
the Company or the Employer of comparable status and position to
the Executive, and (ii) as the scope of the Company's or the
Employer's operations or the Executive's duties expand.
7. Termination For Cause or Without Good Reason. If
--------------------------------------------
there is a Covered Termination for Cause or due to the Executive's
voluntarily terminating his employment other than for Good Reason
(any such terminations to be subject to the procedures set forth in
Section 13 hereof), then the Executive shall be entitled to receive
only Accrued Benefits pursuant to Section 9(a) hereof.
8. Termination Giving Rise to a Termination Payment.
------------------------------------------------
(a) If there is a Covered Termination by the Executive for
Good Reason, or by the Company other than by reason of (i) death,
(ii) disability pursuant to Section 12 hereof, or (iii) Cause (any
such terminations to be subject to the procedures set forth in
Section 13 hereof), then the Executive shall be entitled to receive,
and the Company shall promptly pay, Accrued Benefits and, in lieu of
further base salary for periods following the Termination Date, as
liquidated damages and additional severance pay and in consideration
of the covenant of the Executive set forth in Section 14(a) hereof,
the Termination Payment pursuant to Section 9(b) hereof.
(b) If there is a Covered Termination and the Executive
is entitled to Accrued Benefits and the Termination Payment, then
the Executive shall be entitled to the following additional
benefits:
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<PAGE>
(i) The Executive shall receive, at the expense of
the Company, outplacement services, on an individualized
basis at a level of service commensurate with the
Executive's status with the Company immediately prior to
the Change in Control of the Company (or, if higher,
immediately prior to the termination of the Executive's
employment), provided by a nationally recognized
executive placement firm selected by the Company;
provided that the cost to the Company of such services
shall not exceed 15% of the Executive's annual base
salary in effect immediately prior to the Change in
Control of the Company.
(ii) Until the earlier of the end of the Employment
Period or such time as the Executive has obtained new
employment and is covered by benefits which in the
aggregate are at least equal in value to the following
benefits, the Executive shall continue to be covered, at
the expense of the Company, by the most favorable life
insurance, hospitalization, medical and dental coverage,
provided to the Executive and his family during the 180-day
period immediately prior to the Change in Control of
the Company or, if more favorable to the Executive, the
coverage in effect generally at any time thereafter for
executives of the Company (or the Employer) of comparable
status and position to the Executive and their families.
9. Payments Upon Termination.
-------------------------
(a) Accrued Benefits. For purposes of this Agreement,
----------------
the Executive's "Accrued Benefits" shall include the following
amounts, payable as described herein: (i) all base salary for the
time period ending with the Termination Date; (ii) reimbursement
for any and all
-18-
<PAGE>
monies advanced in connection with the Executive's employment for
reasonable and necessary expenses incurred by the Executive on behalf
of the Company for the time period ending with the Termination Date;
(iii) any and all other cash earned through the Termination Date and
deferred at the election of the Executive or pursuant to any deferred
compensation plan then in effect; (iv) a lump sum payment of any bonus
or incentive compensation otherwise payable to the Executive with
respect to the year in which termination occurs under any bonus or
incentive compensation plan or plans in which the Executive is a
participant; and (v) all other payments and benefits to which the
Executive (or in the event of the Executive's death, the Executive's
surviving spouse or other beneficiary) may be entitled as compensatory
fringe benefits or under the terms of any benefit plan of the Company,
including severance payments under the Company's (or the Employer's)
severance policies or practices in the form most favorable to the
Executive which were in effect at any time during the 180-day
period immediately prior to the Change in Control of the Company or
during the Employment Period. Payment of Accrued Benefits shall be
made promptly in accordance with the Company's prevailing practice
with respect to Subsections (i) and (ii) or, with respect to
Subsections (iii), (iv) and (v), pursuant to the terms of the
benefit plan or practice establishing such benefits.
(b) Termination Payment.
-------------------
(i) Subject to the limits set forth in Subsection
9(b)(ii) hereof, the Termination Payment shall be an amount equal
to (A) the Executive's annual base salary, at the highest rate as
in effect at any time during the 180-day period immediately prior
to the Change in Control of the Company, as adjusted upward, from
time to time, pursuant to Section 6 hereof, plus (B) the amount of
the average annual bonus award (determined on an annualized basis
for any bonus
-19-
<PAGE>
award paid for a period of less than one year and excluding any
year for which the Executive did not participate in any bonus
plan) paid to the Executive with respect to the three complete
fiscal years preceding the Termination Date (the aggregate amount
set forth in (A) and (B) hereof shall hereafter be referred to as
"Annual Cash Compensation"), times (C) the lesser of (1) 2.99
and (2) the number of years or fractional portion thereof remaining
in the Employment Period determined as of the Termination Date.
The Termination Payment shall be paid to the Executive in cash
equivalent ten business days after the Termination Date. Such lump
sum payment shall not be reduced by any present value or similar
factor, and the Executive shall not be required to mitigate the
amount of the Termination Payment by securing other employment or
otherwise, nor will such Termination Payment be reduced by reason
of the Executive securing other employment or for any other reason.
The Termination Payment shall be in lieu of, and acceptance by the
Executive of the Termination Payment shall constitute the
Executive's release of any rights of Executive to, any other
severance payments under any Company (or Employer) severance
policy, practice or agreement. The Company shall bear up to
$10,000 in the aggregate of fees and expenses of consultants and/or
legal or accounting advisors engaged by the Executive to advise the
Executive as to matters relating to the computation of benefits due
and payable under this Subsection 9(b).
(ii) Notwithstanding any other provision of this Agreement, if
any portion of the Termination Payment or any other payment under
this Agreement, or under any other agreement with or plan of the
Company (in the aggregate, "Total Payments"), would constitute an
"excess parachute payment," then the Total Payments to be made to
the Executive shall be reduced such that the value of the aggregate
Total Payments that the Executive is entitled to receive shall be
One Dollar ($1) less than the maximum amount which the Executive
may receive without
-20-
<PAGE>
becoming subject to the tax imposed by Section 4999 of the Code (or
any successor provision) or which the Company may pay without loss
of deduction under Section 280G(a) of the Code (or any successor
provision). For purposes of this Agreement, the terms "excess
parachute payment" and "parachute payments" shall have the meanings
assigned to them in Section 280G of the Code (or any successor
provision), and such "parachute payments" shall be valued as
provided therein. Present value for purposes of this Agreement
shall be calculated in accordance with Section 280G(d)(4) of
the Code (or any successor provision). Within forty days
following delivery of the Notice of Termination or notice by the
Company to the Executive of its belief that there is a payment or
benefit due the Executive which will result in an excess parachute
payment as defined in Section 280G of the Code (or any successor
provision), the Executive and the Company, at the Company's
expense, shall obtain the opinion (which need not be unqualified)
of nationally recognized tax counsel selected by the Company's
independent auditors and acceptable to the Executive in his sole
discretion (which may be regular outside counsel to the Company),
which opinion sets forth (A) the amount of the Base Period Income,
(B) the amount and present value of Total Payments and (C) the
amount and present value of any excess parachute payments
determined without regard to the limitations of this Subsection
9(b)(ii). As used in this Subsection 9(b)(ii), the term "Base
Period Income" means an amount equal to the Executive's "annualized
includible compensation for the base period" as defined in Section
280G(d)(l) of the Code (or any successor provision). For purposes
of such opinion, the value of any noncash benefits or any deferred
payment or benefit shall be determined by the Company's independent
auditors in accordance with the principles of Sections 280G(d)(3)
and (4) of the Code (or any successor provisions), which
determination shall be evidenced in a certificate of such auditors
addressed to
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<PAGE>
the Company and the Executive. Such opinion shall be dated as of the
Termination Date and addressed to the Company and the Executive and
shall be binding upon the Company and the Executive. If such opinion
determines that there would be an excess parachute payment, the
Termination Payment hereunder or any other payment or benefit
determined by such counsel to be includible in Total Payments shall be
reduced or eliminated as specified by the Executive in writing
delivered to the Company within thirty days of his receipt of such
opinion or, if the Executive fails to so notify the Company, then as
the Company shall reasonably determine, so that under the bases of
calculations set forth in such opinion there will be no excess
parachute payment. If such legal counsel so requests in connection
with the opinion required by this Section, the Executive and the
Company shall obtain, at the Company's expense, and the legal counsel
may rely on in providing the opinion, the advice of a firm of
recognized executive compensation consultants as to the reasonableness
of any item of compensation to be received by the Executive. If the
provisions of Sections 280G and 4999 of the Code (or any successor
provisions) are repealed without succession, then this Section 9(b)
(ii) shall be of no further force or effect.
(iii) (A) If, notwithstanding the provisions of Subsection
(ii) of this Section 9(b), but subject to paragraph (B), it is
ultimately determined by a court or pursuant to a final
determination by the Internal Revenue Service that any portion of
Total Payments is subject to the tax (the "Excise Tax") imposed by
Section 4999 of the Code (or any successor provision), the Company
shall pay to the Executive an additional amount (the "Gross-Up
Payment") such that the net amount retained by the Executive after
deduction of any Excise Tax and any interest charges or penalties
in respect of the imposition of such Excise Tax (but not any
federal, state or local
-22-
<PAGE>
income tax) on the Total Payments, and any federal, state and local
income tax and Excise Tax upon the payment provided for by this
Subsection (iii), shall be equal to the Total Payments. For purposes
of determining the amount of the Gross-Up Payment, the Executive shall
be deemed to pay federal income taxes at the highest marginal rate of
federal income taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at the highest
marginal rates of taxation in the state and locality of the
Executive's domicile for income tax purposes on the date the Gross-Up
Payment is made, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes.
(B) If legislation is enacted that would require the
Company's shareholders to approve this Agreement, prior to a Change
in Control of the Company, due solely to the provision contained in
paragraph (A) of this Subsection 9(b)(iii), then
(1) from and after such time as shareholder
approval would be required, until shareholder approval is
obtained as required by such legislation, paragraph (A)
shall be of no force and effect;
(2) the Company and the Executive shall use their
best efforts to consider and agree in writing upon an
amendment to this Subsection 9(b) (iii) such that, as
amended, this Subsection would provide the Executive with
the benefits intended to be afforded to the Executive by
paragraph (A) without requiring shareholder approval; and
(3) at the reasonable request of the Executive, the
Company shall seek shareholder approval of this Agreement
at the next annual meeting of shareholders of the
Company.
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<PAGE>
10. Death. (a) Except as provided in Section 10(b)
-----
hereof, in the event of a Covered Termination due to the
Executive's death, the Executive's estate, heirs and beneficiaries
shall receive all the Executive's Accrued Benefits through the
Termination Date.
(b) In the event the Executive dies after a Notice of
Termination is given (i) by the Company or (ii) by the Executive
for Good Reason, the Executive's estate, heirs and beneficiaries
shall be entitled to the benefits described in Section 10(a) hereof
and, subject to the provisions of this Agreement, to such
Termination Payment as the Executive would have been entitled to
had the Executive lived. For purposes of this Subsection 10(b),
the Termination Date shall be the earlier of thirty days following
the giving of the Notice of Termination, subject to extension
pursuant to Section 1(m) hereof, or one day prior to the end of the
Employment Period.
11. Retirement. If, during the Employment Period, the
----------
Executive and the Company shall execute an agreement providing for
the early retirement of the Executive from the Company, or the
Executive shall otherwise give notice that he is voluntarily
choosing to retire early from the Company, the Executive shall
receive Accrued Benefits through the Termination Date; provided,
that if the Executive's employment is terminated by the Executive
for Good Reason or by the Company other than by reason of death,
disability or Cause and the Executive also, in connection with such
termination, elects voluntary early retirement, the Executive shall
also be entitled to receive a Termination Payment pursuant to
Section 8(a) hereof.
12. Termination for Disability. If, during the
--------------------------
Employment Period, as a result of the Executive's disability due to
physical or mental illness or injury (regardless of whether such
illness or injury is job-related), the Executive shall have been
absent from the Executive's duties hereunder on a full-time basis
for a period of six consecutive months and, within thirty days
after
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<PAGE>
the Company notifies the Executive in writing that it intends
to terminate the Executive's employment (which notice shall not
constitute the Notice of Termination contemplated below), the
Executive shall not have returned to the performance of the
Executive's duties hereunder on a full-time basis, the Company may
terminate the Executive's employment for purposes of this Agreement
pursuant to a Notice of Termination given in accordance with
Section 13 hereof. If the Executive's employment is terminated on
account of the Executive's disability in accordance with this
Section, the Executive shall receive Accrued Benefits in accordance
with Section 9(a) hereof and shall remain eligible for all benefits
provided by any long term disability programs of the Company in
effect at the time of such termination.
13. Termination Notice and Procedure. Any Covered
--------------------------------
Termination by the Company or the Executive (other than a
termination of the Executive's employment that is a Covered
Termination by virtue of Section 2(b) hereof) shall be communicated
by written Notice of Termination to the Executive, if such Notice
is given by the Company, and to the Company, if such Notice is
given by the Executive, all in accordance with the following
procedures and those set forth in Section 23 hereof:
(a) If such termination is for disability, Cause or Good
Reason, the Notice of Termination shall indicate in reasonable
detail the facts and circumstances alleged to provide a basis for
such termination.
(b) Any Notice of Termination by the Company shall have
been approved, prior to the giving thereof to the Executive, by a
resolution duly adopted by a majority of the directors of the
Company (or any successor corporation) then in office.
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<PAGE>
(c) If the Notice is given by the Executive for Good
Reason, the Executive may cease performing his duties hereunder on
or after the date fifteen days after the delivery of Notice of
Termination and shall in any event cease employment on the
Termination Date. If the Notice is given by the Company, then the
Executive may cease performing his duties hereunder on the date of
receipt of the Notice of Termination, subject to the Executive's
rights hereunder.
(d) The Executive shall have thirty days, or such longer
period as the Company may determine to be appropriate, to cure any
conduct or act, if curable, alleged to provide grounds for
termination of the Executive's employment for Cause under this
Agreement pursuant to Subsection 1(d) (iii) hereof.
(e) The recipient of any Notice of Termination shall
personally deliver or mail in accordance with Section 23 hereof
written notice of any dispute relating to such Notice of
Termination to the party giving such Notice within fifteen days
after receipt thereof; provided, however, that if the Executive's
conduct or act alleged to provide grounds for termination by the
Company for Cause is curable, then such period shall be thirty
days. After the expiration of such period, the contents of the
Notice of Termination shall become final and not subject to
dispute.
14. Further Obligations of the Executive.
------------------------------------
(a) Competition. The Executive agrees that, in the
-----------
event of any Covered Termination where the Executive is entitled to
Accrued Benefits and the Termination Payment, the Executive shall
not, for a period expiring one year after the Termination Date,
without the prior written approval of the Company's Board of
Directors, participate in the management of, be employed by or own
any business enterprise at a location within the United States that
engages in substantial competition with the Company or its
subsidiaries, where the operating revenues of
-26-
<PAGE>
the Company from activities in competition with such entity amount to
10% or more of the total operating net revenues of the Company for its
most recently completed fiscal year; provided, however, that nothing
in this Section 14(a) shall prohibit the Executive from owning stock
or other securities of a competitor amounting to less than five
percent of the outstanding capital stock of such competitor.
(b) Confidentiality. During and following the
---------------
Executive's employment by the Company, the Executive shall hold in
confidence and not directly or indirectly disclose or use or copy
or make lists of any confidential information or proprietary data
of the Company (including that of the Employer), except to the
extent authorized in writing by the Board of Directors of the
Company or required by any court or administrative agency, other
than to an employee of the Company or a person to whom disclosure
is reasonably necessary or appropriate in connection with the
performance by the Executive of duties as an executive of the
Company. Confidential information shall not include any
information known generally to the public or any information of a
type not otherwise considered confidential by persons engaged in
the same business or a business similar to that of the Company.
All records, files, documents and materials, or copies thereof,
relating to the business of the Company which the Executive shall
prepare, or use, or come into contact with, shall be and remain the
sole property of the Company and shall be promptly returned to the
Company upon termination of employment with the Company.
15. Expenses and Interest. If, after a Change in
---------------------
Control of the Company, (i) a dispute arises with respect to the
enforcement of the Executive's rights under this Agreement or (ii)
any legal or arbitration proceeding shall be brought to enforce or
interpret any provision contained herein or to recover damages for
breach hereof, in either case so long as the Executive
-27-
<PAGE>
is not acting in bad faith, the Executive shall recover from the
Company any reasonable attorneys' fees and necessary costs and
disbursements incurred as a result of such dispute, legal or
arbitration proceeding ("Expenses"), and prejudgment interest on
any money judgment or arbitration award obtained by the Executive
calculated at the rate of interest announced by Firstar Bank
Milwaukee, National Association, Milwaukee, Wisconsin, from time to
time as its prime or base lending rate from the date that payments
to him should have been made under this Agreement. Within ten days
after the Executive's written request therefor, the Company shall
pay to the Executive, or such other person or entity as the
Executive may designate in writing to the Company, the Executive's
reasonable Expenses in advance of the final disposition or
conclusion of any such dispute, legal or arbitration proceeding.
16. Payment Obligations Absolute. The Company's
----------------------------
obligation during and after the Employment Period to pay the
Executive the amounts and to make the benefit and other
arrangements provided herein shall be absolute and unconditional
and shall not be affected by any circumstances, including, without
limitation, any setoff, counterclaim, recoupment, defense or other
right which the Company may have against him or anyone else.
Except as provided in Section 15 of this Agreement, all amounts
payable by the Company hereunder shall be paid without notice or
demand. Each and every payment made hereunder by the Company shall
be final, and the Company will not seek to recover all or any part
of such payment from the Executive, or from whomsoever may be
entitled thereto, for any reason whatsoever.
17. Successors. (a) If the Company sells, assigns or
----------
transfers all or substantially all of its business and assets to
any Person or if the Company merges into or consolidates or
otherwise combines (where the Company does not survive such
combination) with any Person
-28-
<PAGE>
(any such event, a "Sale of Business"), then the Company shall assign
all of its right, title and interest in this Agreement as of the date
of such event to such Person, and the Company shall cause such Person,
by written agreement in form and substance reasonably satisfactory to
the Executive, to expressly assume and agree to perform from and after
the date of such assignment all of the terms, conditions and
provisions imposed by this Agreement upon the Company. Failure of
the Company to obtain such agreement prior to the effective date of
such Sale of Business shall be a breach of this Agreement
constituting "Good Reason" hereunder, except that for purposes of
implementing the foregoing the date upon which such Sale of
Business becomes effective shall be deemed the Termination Date.
In case of such assignment by the Company and of assumption and
agreement by such Person, as used in this Agreement, "Company"
shall thereafter mean such Person which executes and delivers the
agreement provided for in this Section 17 or which otherwise
becomes bound by all the terms and provisions of this Agreement by
operation of law, and this Agreement shall inure to the benefit of,
and be enforceable by, such Person. The Executive shall, in his
discretion, be entitled to proceed against any or all of such
Persons, any Person which theretofore was such a successor to the
Company (as defined in the first paragraph of this Agreement) and
the Company (as so defined) in any action to enforce any rights of
the Executive hereunder. Except as provided in this Subsection,
this Agreement shall not be assignable by the Company. This
Agreement shall not be terminated by the voluntary or involuntary
dissolution of the Company.
(b) This Agreement and all rights of the Executive shall
inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators, heirs
and beneficiaries. All amounts payable to the Executive under
Sections 7, 8, 9, 10, 11, 12
-29-
<PAGE>
and 15 hereof if the Executive had lived shall be paid, in the event
of the Executive's death, to the Executive's estate, heirs and
representatives; provided, however, that the foregoing shall not be
construed to modify any terms of any benefit plan of the Company, as
such terms are in effect on the date of the Change in Control of the
Company, that expressly govern benefits under such plan in the event
of the Executive's death.
18. Severability. The provisions of this Agreement
------------
shall be regarded as divisible, and if any of said provisions or
any part hereof are declared invalid or unenforceable by a court of
competent jurisdiction, the validity and enforceability of the
remainder of such provisions or parts hereof and the applicability
thereof shall not be affected thereby.
19. Amendment. This Agreement may not be amended or
---------
modified at any time except by written instrument executed by the
Company and the Executive.
20. Withholding. The Company shall be entitled to
-----------
withhold from amounts to be paid to the Executive hereunder any
federal, state or local withholding or other taxes or charges which
it is from time to time required to withhold; provided, that the
-------- ----
amount so withheld shall not exceed the minimum amount required to
be withheld by law. The Company shall be entitled to rely on an
opinion of nationally recognized tax counsel if any question as to
the amount or requirement of any such withholding shall arise.
21. Certain Rules of Construction. No party shall be
-----------------------------
considered as being responsible for the drafting of this Agreement
for the purpose of applying any rule construing ambiguities against
the drafter or otherwise. No draft of this Agreement shall be
taken into account in construing this Agreement. Any provision of
this Agreement which requires an
-30-
<PAGE>
agreement in writing shall be deemed to require that the writing in
question be signed by the Executive and an authorized representative
of the Company.
22. Governing Law; Resolution of Disputes. This
-------------------------------------
Agreement and the rights and obligations hereunder shall be
governed by and construed in accordance with the laws of the State
of Wisconsin. Any dispute arising out of this Agreement shall, at
the Executive's election, be determined by arbitration under the
rules of the American Arbitration Association then in effect (in
which case both parties shall be bound by the arbitration award) or
by litigation. Whether the dispute is to be settled by arbitration
or litigation, the venue for the arbitration or litigation shall be
Green Bay, Wisconsin or, at the Executive's election, if the
Executive is no longer residing or working in the Green Bay,
Wisconsin metropolitan area, in the judicial district encompassing
the city in which the Executive resides; provided, that, if the
-------- ----
Executive is not then residing in the United States, the election
of the Executive with respect to such venue shall be either Green
Bay, Wisconsin or in the judicial district encompassing that city
in the United States among the thirty cities having the largest
population (as determined by the most recent United States Census
data available at the Termination Date) which is closest to the
Executive's residence. The parties consent to personal
jurisdiction in each trial court in the selected venue having
subject matter jurisdiction notwithstanding their residence or
situs, and each party irrevocably consents to service of process in
the manner provided hereunder for the giving of notices.
23. Notice. Notices given pursuant to this Agreement
------
shall be in writing and, except as otherwise provided by Section
13(d) hereof, shall be deemed given when actually received by the
Executive or actually received by the Company's Secretary or any
officer of the Company other than the Executive. If mailed, such
notices shall be mailed by United States
-31-
<PAGE>
registered or certified mail, return receipt requested, addressee
only, postage prepaid, if to the Company, to WPS Resources
Corporation, Attention: Secretary (or President, if the Executive is
then Secretary), 700 North Adams Street, P.O. Box 19001, Green Bay,
Wisconsin 54307, or if to the Executive, at the address set forth
below the Executive's signature to this Agreement, or to such other
address as the party to be notified shall have theretofore given to
the other party in writing.
24. No Waiver. No waiver by either party at any time of
---------
any breach by the other party of, or compliance with, any condition
or provision of this Agreement to be performed by the other party
shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same time or any prior or subsequent time.
25. Headings. The headings herein contained are for
--------
reference only and shall not affect the meaning or interpretation
of any provision of this Agreement.
26. Appendix A. Appendix A has been attached for
----------
informational purposes only and does not constitute a part of this
Agreement. All references in this Agreement to the sections of the
Code set forth in Appendix A are to such sections as actually in
effect from time to time and not necessarily to the sections as set
forth in Appendix A.
-32-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first above written.
WPS RESOURCES CORPORATION
By: ___________________________________
Its: __________________________________
EXECUTIVE:
By: ___________________________________
Title: ________________________________
Attest: _______________________________
_______________________________________
-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 Six Months Ended
(Thousands) June 30 June 30
1997 1996 1997 1996
==============================================================================================
<S> <C> <C> <C> <C>
Shares of common stock at beginning of period 23,878 23,894 23,883 23,897
Shares of common stock purchased for deferred
compensation trust -
Date of deferred Number
compensation trust purchase of Shares
- --------------------------- ---------
January 20, 1997 2,190 2
February 20, 1997 1,384 1
March 20, 1997 1,930 2
April 21, 1997 1,611 2 2
May 20, 1997 1,569 2 2
June 20, 1997 1,946 2 2
January 22, 1996 469 1
February 20, 1996 1,027 1
March 21, 1996 1,132 1
April 22, 1996 1,075 1 1
May 20, 1996 1,119 1 1
June 20, 1996 1,256 1 1
- ----------------------------------------------------------------------------------------------
Shares of common stock at end of period 23,872 23,891 23,872 23,891
==============================================================================================
Computation of daily weighted average
shares:
Shares of common stock at
beginning of period -
Number Number
of of
Days Shares
------ ------
June 30, 1996 21 23,894,334 501,781
June 30, 1996 21 23,896,962 501,836
June 30, 1997 19 23,882,741 453,772
June 30, 1997 20 23,877,237 477,545
Shares of common stock after
purchase for deferred compensation trust -
Number Number
of of
Days Shares
------ ------
June 30, 1997 31 23,880,551 740,297
June 30, 1997 28 23,879,167 668,617
June 30, 1997 32 23,877,237 764,072
June 30, 1997 29 23,875,626 692,393 692,393
June 30, 1997 31 23,874,057 740,096 740,096
June 30, 1997 11 23,872,111 262,593 262,593
June 30, 1996 29 23,896,493 692,998
June 30, 1996 10 23,895,466 238,955
June 30, 1996 20 23,895,467 477,909
June 30, 1996 32 23,894,334 764,619
June 30, 1996 28 23,893,259 669,011 669,011
June 30, 1996 18 23,892,140 430,059 430,059
June 30, 1996 13 23,892,141 310,598 310,598
June 30, 1996 11 23,890,884 262,800 262,800
- ----------------------------------------------------------------------------------------------
Total days - weighted 2,172,627 2,174,249 4,321,840 4,348,785
==============================================================================================
Average number of shares of common
stock based on daily
weighted average computations 23,875 23,893 23,878 23,894
==============================================================================================
Earnings on common stock, as set forth
in statements of income $9,571 $10,120 $27,806 $33,640
==============================================================================================
Earnings per share of common stock based on
weighted average shares $0.40 $0.42 $1.16 $1.41
==============================================================================================
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
<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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 891,927
<OTHER-PROPERTY-AND-INVEST> 131,211
<TOTAL-CURRENT-ASSETS> 166,478
<TOTAL-DEFERRED-CHARGES> 87,959
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,277,575
<COMMON> 23,897
<CAPITAL-SURPLUS-PAID-IN> 145,021
<RETAINED-EARNINGS> 305,129
<TOTAL-COMMON-STOCKHOLDERS-EQ> 474,047
0
51,200
<LONG-TERM-DEBT-NET> 304,955
<SHORT-TERM-NOTES> 12,900
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 7,600
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 0
<TOT-CAPITALIZATION-AND-LIAB> 376,655
<GROSS-OPERATING-REVENUE> 454,373
<INCOME-TAX-EXPENSE> 14,069
<OTHER-OPERATING-EXPENSES> 405,483
<TOTAL-OPERATING-EXPENSES> 405,483<F1>
<OPERATING-INCOME-LOSS> 48,890<F2>
<OTHER-INCOME-NET> 6,780
<INCOME-BEFORE-INTEREST-EXPEN> 55,670<F3>
<TOTAL-INTEREST-EXPENSE> 12,705
<NET-INCOME> 29,362<F4>
1,556
<EARNINGS-AVAILABLE-FOR-COMM> 27,806
<COMMON-STOCK-DIVIDENDS> 22,702
<TOTAL-INTEREST-ON-BONDS> 11,385
<CASH-FLOW-OPERATIONS> 94,858
<EPS-PRIMARY> 1.16
<EPS-DILUTED> 1.16
<FN>
<F1>Operating expenses exclude income taxes of $14,069.
<F2>Operating income is before income taxes of $14,069.
<F3>Income before interest expense is before income taxes of
$14,069.
<F4>Net income includes minority interest of ($466).
</FN>
</TABLE>
