-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UaMXQQFBuxV4i0tPorQ+7DITxBv06iUfuXY9+4KxDQav9IpxBjFV/4v1X2MHK8+v OZ8KWTWvcAA5ASjPyyADrw== 0000107833-95-000007.txt : 19951031 0000107833-95-000007.hdr.sgml : 19951031 ACCESSION NUMBER: 0000107833-95-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951030 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WISCONSIN PUBLIC SERVICE CORP CENTRAL INDEX KEY: 0000107833 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 390715160 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-20373 FILM NUMBER: 95585235 BUSINESS ADDRESS: STREET 1: 700 N ADAMS ST STREET 2: PO BOX 19001 CITY: GREEN BAY STATE: WI ZIP: 54307-9001 BUSINESS PHONE: 4144331598 10-Q 1 ______________________________________________________________________________ ______________________________________________________________________________ SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission Registrant; State of Incorporation; IRS Employer File Number Address; and Telephone Number Identification No. - ----------- ----------------------------------- ------------------ 1-11337 WPS RESOURCES CORPORATION 39-1775292 (A Wisconsin Corporation) 700 North Adams Street P. O. Box 19001 Green Bay, WI 54307-9001 414-433-1445 1-3016 WISCONSIN PUBLIC SERVICE CORPORATION 39-0715160 (A Wisconsin Corporation) 700 North Adams Street P. O. Box 19001 Green Bay, WI 54307-9001 414-433-1445 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [ ] Indicate the number of shares outstanding of each of the issuers' classes of common stock, as of the latest practicable date: WPS RESOURCES CORPORATION Common stock, $1 par value, 23,896,962 shares outstanding at October 30, 1995 WISCONSIN PUBLIC SERVICE CORPORATION Common stock, $4 par value, 23,896,962 shares outstanding at October 30, 1995 ______________________________________________________________________________ ______________________________________________________________________________ WPS RESOURCES CORPORATION AND WISCONSIN PUBLIC SERVICE CORPORATION FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995 CONTENTS Page INTRODUCTION 3 PART I. FINANCIAL INFORMATION Item 1. Financial Statements WPS RESOURCES CORPORATION Consolidated Statements of Income and Retained Earnings 4 Consolidated Balance Sheets 5 Consolidated Statements of Capitalization 6 Consolidated Statements of Cash Flows 7 WISCONSIN PUBLIC SERVICE CORPORATION Consolidated Statements of Income 8 Consolidated Balance Sheets 9 Consolidated Statements of Capitalization 10 Consolidated Statements of Cash Flows 11 Consolidated Statements of Retained Earnings 12 CONDENSED NOTES TO FINANCIAL STATEMENTS OF WPS Resources Corporation and Wisconsin Public Service Corporation 13 - 14 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations for WPS Resources Corporation and Wisconsin Public Service Corporation 15 - 20 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 21 Signatures 22 - 23 EXHIBIT INDEX 24 Exhibit 27 Financial Data Schedule WPS Resources Corporation Wisconsin Public Service Corporation -2- 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 WPS Resources Corporation and Wisconsin Public Service Corporation for the year ended December 31, 1994. In the opinion of the Company and WPSC, their respective interim financial statements filed as part of this Form 10-Q reflect all adjustments necessary to present fairly the results for the respective periods. Due to the influence of weather and other factors which are characteristics of WPSC's utility operations, financial results for the periods ended September 30, 1995 and 1994 are not necessarily indicative of trends for any 12-month period. -3- PAGE Part I. FINANCIAL INFORMATION Item 1. Financial Statements WPS RESOURCES CORPORATION
====================================================================================================================== CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNING THREE MONTHS ENDED NINE MONTHS ENDED (Thousands, except per share amounts) SEPTEMBER 30 SEPTEMBER 30 1995 1994 1995 1994 ====================================================================================================================== Operating revenues Electric $130,800 $124,340 $369,318 $363,842 Gas 35,948 27,917 147,294 140,421 - ---------------------------------------------------------------------------------------------------------------------- Total operating revenues 166,748 152,257 516,612 504,263 ====================================================================================================================== Operating expenses Electric production fuels 28,654 29,177 79,161 85,479 Purchased power 9,890 8,995 32,367 28,747 Gas purchased for resale 27,694 21,489 106,567 99,416 Other operating expenses 34,383 36,878 110,162 110,756 Maintenance 10,288 9,877 38,826 35,689 Depreciation and decommissioning 16,579 14,042 48,991 42,108 Taxes other than income 6,567 6,544 19,415 19,531 - ---------------------------------------------------------------------------------------------------------------------- Total operating expenses 134,055 127,002 435,489 421,726 ====================================================================================================================== Operating income 32,693 25,255 81,123 82,537 ====================================================================================================================== Other income (expense) Allowance for equity funds used during construction 54 40 127 82 Other, net (934) 1,459 4,981 3,793 - ---------------------------------------------------------------------------------------------------------------------- Total other income (expense) (880) 1,499 5,108 3,875 ====================================================================================================================== Income before interest expense 31,813 26,754 86,231 86,412 ====================================================================================================================== Interest on long-term debt 5,654 5,770 17,243 17,612 Other interest 620 477 1,874 1,364 Allowance for borrowed funds used during construction 32 (38) (49) (100) - ---------------------------------------------------------------------------------------------------------------------- Total interest expense 6,306 6,209 19,068 18,876 ====================================================================================================================== Income before income taxes 25,507 20,545 67,163 67,536 Income taxes 8,997 6,817 22,994 23,325 Preferred stock dividends of subsidiary 778 778 2,333 2,333 - ---------------------------------------------------------------------------------------------------------------------- Net income 15,732 12,950 41,836 41,878 ====================================================================================================================== Retained earnings at beginning of period 301,950 295,654 297,592 287,915 Cash dividends on common stock 11,112 10,873 32,858 32,141 Other - 79 - - - ---------------------------------------------------------------------------------------------------------------------- Retained earnings at end of period $306,570 $297,652 $306,570 $297,652 ====================================================================================================================== Average shares of common stock outstanding 23,897 23,897 23,897 23,897 Earnings per average share of common stock $0.66 $0.54 $1.75 $1.75 Dividend per share of common stock $0.465 $0.455 $1.375 $1.345 ======================================================================================================================
[FN] The accompanying notes are an integral part of these statements. -4- WPS RESOURCES CORPORATION
======================================================================================================= CONSOLIDATED BALANCE SHEETS SEPTEMBER 30 December 31 (Thousands) 1995 1994 ======================================================================================================= ASSETS - ------------------------------------------------------------------------------------------------------- Utility plant Electric $1,443,929 $1,412,666 Gas 222,261 202,903 - ------------------------------------------------------------------------------------------------------- Total 1,666,190 1,615,569 Accumulated depreciation and decommissioning (899,642) (846,505) - ------------------------------------------------------------------------------------------------------- Total 766,548 769,064 Nuclear decommissioning trusts 79,249 64,147 Construction in progress 5,900 11,131 Nuclear fuel, less accumulated amortization 15,216 19,417 - ------------------------------------------------------------------------------------------------------- Net utility plant 866,913 863,759 ======================================================================================================= Current assets Cash and equivalents 15,272 13,167 Customer and other receivables, net of reserves 53,243 60,029 Accrued utility revenues 17,988 28,820 Fossil fuel, at average cost 8,272 10,505 Gas in storage, at average cost 15,612 15,787 Materials and supplies, at average cost 21,393 20,585 Prepayments and other 15,069 21,122 - ------------------------------------------------------------------------------------------------------- Total current assets 146,849 170,015 ======================================================================================================= Regulatory assets 98,869 109,135 Investments and other assets 88,332 74,366 ======================================================================================================= Total $1,200,963 $1,217,275 ======================================================================================================= CAPITALIZATION AND LIABILITIES - ------------------------------------------------------------------------------------------------------- Capitalization Common stock equity $456,831 $446,540 Preferred stock of subsidiary with no mandatory redemption 51,200 51,200 Long-term debt 308,691 309,945 - ------------------------------------------------------------------------------------------------------- Total capitalization 816,722 807,685 ======================================================================================================= Current liabilities Note payable 10,000 10,000 Commercial paper - 12,500 Accounts payable 46,502 66,643 Accrued taxes 3,418 1,152 Accrued interest 7,890 8,068 Other 15,092 7,494 - ------------------------------------------------------------------------------------------------------- Total current liabilities 82,902 105,857 ======================================================================================================= Long-term liabilities and deferred credits Accumulated deferred income taxes 129,879 126,639 Accumulated deferred investment tax credits 30,887 32,172 Regulatory liabilities 53,996 65,995 Long-term liabilities 86,577 78,927 - ------------------------------------------------------------------------------------------------------- Total long-term liabilities and deferred credits 301,339 303,733 ======================================================================================================= Total $1,200,963 $1,217,275 =======================================================================================================
[FN] The accompanying notes are an integral part of these statements. -5- WPS RESOURCES CORPORATION
======================================================================================================== CONSOLIDATED STATEMENTS OF CAPITALIZATION SEPTEMBER 30 DECEMBER 31 (Thousands, except share amounts) 1995 1994 ======================================================================================================== Common stock equity Common stock, $1 par value, 100,000,000 shares authorized; and 23,896,962 shares outstanding $23,897 $23,897 Premium on capital stock 145,021 145,021 Retained earnings 306,570 297,592 ESOP loan guarantees (18,657) (19,970) - -------------------------------------------------------------------------------------------------------- Total common stock equity 456,831 446,540 ======================================================================================================== Preferred stock - Wisconsin Public Service Corporation Cumulative, $100 par value, 1,000,000 shares authorized; with no mandatory redemption Series Shares Outstanding ------ ------------------ 5.00% 132,000 13,200 13,200 5.04% 30,000 3,000 3,000 5.08% 50,000 5,000 5,000 6.76% 150,000 15,000 15,000 6.88% 150,000 15,000 15,000 - -------------------------------------------------------------------------------------------------------- Total preferred stock 51,200 51,200 ======================================================================================================== Long-term debt First mortgage bonds - Wisconsin Public Service Corporation Series Year Due ------ -------- 5-1/4% 1998 50,000 50,000 7.30% 2002 50,000 50,000 6.80% 2003 50,000 50,000 6-1/8% 2005 9,075 9,075 6.90% 2013 22,000 22,000 8.80% 2021 60,000 60,000 7-1/8% 2023 50,000 50,000 - -------------------------------------------------------------------------------------------------------- Total 291,075 291,075 Unamortized discount and premium on bonds, net (1,088) (1,154) - -------------------------------------------------------------------------------------------------------- Total first mortgage bonds 289,987 289,921 - -------------------------------------------------------------------------------------------------------- ESOP loan guarantees 18,657 19,970 Other long-term debt 47 54 - -------------------------------------------------------------------------------------------------------- Total long-term debt 308,691 309,945 ======================================================================================================== Total capitalization $816,722 $807,685 ========================================================================================================
[FN] The accompanying notes are an integral part of these statements. -6- WPS RESOURCES CORPORATION
======================================================================================================= CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended (Thousands) September 30 1995 1994 ======================================================================================================= Cash flows from operating activities Net income $41,836 $41,878 Adjustments to reconcile net income to net cash from operating activities Depreciation and decommissioning 48,991 42,108 Amortization of nuclear fuel and other 21,700 21,474 Deferred income taxes (3,791) (1,244) Investment tax credit restored (1,285) (1,403) AFUDC equity (127) (82) Pension income (9,919) (8,131) Postretirement funding 5,188 5,277 Deferred demand-side management expenditures (6,447) (7,338) Other, net (216) 1,176 Changes in Customer and other receivables 6,786 16,909 Accrued utility revenues 10,832 19,022 Fossil fuel inventory 2,233 109 Gas in storage 175 240 Accounts payable (22,291) (20,083) Miscellaneous current and accrued liabilities 11,350 2,819 Accrued taxes 2,266 (1,458) - ------------------------------------------------------------------------------------------------------- Net cash from operating activities 107,281 111,273 ======================================================================================================= Cash flows from (used for) investing activities Construction and nuclear fuel expenditures (47,628) (45,925) Allowance for borrowed funds used during construction (50) (100) Decommissioning funding (9,131) (3,649) Purchase of investments (4,000) - Other 991 1,872 - ------------------------------------------------------------------------------------------------------- Net cash from (used for) investing activities (59,818) (47,802) ======================================================================================================= Cash flows from (used for) financing activities Redemption and maturities of first mortgage bonds - (1,000) Change in commercial paper (12,500) (11,000) Cash dividends on common stock (32,858) (32,141) - ------------------------------------------------------------------------------------------------------- Net cash from (used for) financing activities (45,358) (44,141) ======================================================================================================= Net increase (decrease) in cash and equivalents 2,105 19,330 Cash and equivalents at beginning of period 13,167 5,393 ======================================================================================================= Cash and equivalents at end of period $15,272 $24,723 ======================================================================================================= Cash paid during period for Interest, less amount capitalized $16,289 $18,463 Income taxes 19,500 24,832 Preferred stock dividends of subsidiary 2,333 2,333 =======================================================================================================
[FN] The accompanying notes are an integral part of these statements. -7- WISCONSIN PUBLIC SERVICE CORPORATION
====================================================================================================================== CONSOLIDATED STATEMENTS OF INCOME Three Months Ended Nine Months Ended (Thousands) September 30 September 30 1995 1994 1995 1994 ====================================================================================================================== Operating revenues Electric $130,800 $124,340 $369,318 $363,842 Gas 25,743 25,290 118,616 134,087 - ---------------------------------------------------------------------------------------------------------------------- Total operating revenues 156,543 149,630 487,934 497,929 ====================================================================================================================== Operating expenses Electric production fuels 28,654 29,177 79,161 85,479 Purchased power 9,890 8,995 32,367 28,747 Gas purchased for resale 17,698 18,946 78,440 93,274 Other operating expenses 33,871 36,745 108,769 110,384 Maintenance 10,288 9,877 38,826 35,689 Depreciation and decommissioning 16,579 14,042 48,991 42,108 Federal income taxes 7,980 5,307 18,813 18,909 Investment tax credit restored (387) (498) (1,285) (1,403) State income taxes 2,319 2,036 5,650 5,863 Gross receipts and other taxes 6,567 6,544 19,414 19,531 - ---------------------------------------------------------------------------------------------------------------------- Total operating expenses 133,459 131,171 429,146 438,581 ====================================================================================================================== Operating income 23,084 18,459 58,788 59,348 ====================================================================================================================== Other income Allowance for equity funds used during construction 54 40 127 82 Other, net (741) 1,381 5,148 3,715 Income taxes 718 13 (109) (23) - ---------------------------------------------------------------------------------------------------------------------- Total other income 31 1,434 5,166 3,774 ====================================================================================================================== Income before interest expense 23,115 19,893 63,954 63,122 ====================================================================================================================== Interest on long-term debt 5,795 5,770 17,657 17,612 Other interest 612 477 1,864 1,364 Allowance for borrowed funds used during construction 32 (38) (49) (100) - ---------------------------------------------------------------------------------------------------------------------- Total interest expense 6,439 6,209 19,472 18,876 ====================================================================================================================== Net income 16,676 13,684 44,482 44,246 Preferred stock dividend requirements 778 778 2,333 2,333 - ---------------------------------------------------------------------------------------------------------------------- Earnings on common stock $15,898 $12,906 $42,149 $41,913 ======================================================================================================================
[FN] The accompanying notes are an integral part of these statements. -8- WISCONSIN PUBLIC SERVICE CORPORATION
================================================================================================== CONSOLIDATED BALANCE SHEETS SEPTEMBER 30 DECEMBER 31 (Thousands) 1995 1994 ================================================================================================== ASSETS - -------------------------------------------------------------------------------------------------- Utility plant Electric $1,443,929 $1,412,666 Gas 222,234 202,897 - -------------------------------------------------------------------------------------------------- Total 1,666,163 1,615,563 Accumulated depreciation and decommissioning (899,640) (846,505) - -------------------------------------------------------------------------------------------------- Total 766,523 769,058 Nuclear decommissioning trusts 79,249 64,147 Construction in progress 5,900 11,131 Nuclear fuel, less accumulated amortization 15,216 19,417 - -------------------------------------------------------------------------------------------------- Net utility plant 866,888 863,753 ================================================================================================== Current assets Cash and equivalents 8,290 3,449 Customer and other receivables, net of reserves 48,876 58,036 Accrued utility revenues 17,988 28,820 Fossil fuel, at average cost 8,272 10,505 Gas in storage, at average cost 14,680 15,783 Materials and supplies, at average cost 21,393 20,585 Prepayments and other 15,046 21,091 - -------------------------------------------------------------------------------------------------- Total current assets 134,545 158,269 ================================================================================================== Regulatory assets 98,869 109,135 Investments and other assets 81,501 74,069 ================================================================================================== Total $1,181,803 $1,205,226 ================================================================================================== CAPITALIZATION AND LIABILITIES - -------------------------------------------------------------------------------------------------- Capitalization Common stock equity $438,057 $429,953 Preferred stock with no mandatory redemption 51,200 51,200 Long-term debt to parent 6,122 6,176 Long-term debt 308,691 309,945 - -------------------------------------------------------------------------------------------------- Total capitalization 804,070 797,274 ================================================================================================== Current liabilities Note payable 10,000 10,002 Commercial paper - 12,500 Accounts payable 40,478 65,336 Accrued taxes 3,418 1,199 Accrued interest 7,890 8,068 Other 14,136 6,627 - -------------------------------------------------------------------------------------------------- Total current liabilities 75,922 103,732 ================================================================================================== Long-term liabilities and deferred credits Accumulated deferred income taxes 130,349 127,126 Accumulated deferred investment tax credits 30,887 32,172 Regulatory liabilities 53,996 65,995 Long-term liabilities 86,579 78,927 - -------------------------------------------------------------------------------------------------- Total long-term liabilities and deferred credits 301,811 304,220 ================================================================================================== Total $1,181,803 $1,205,226 ==================================================================================================
[FN] The accompanying notes are an integral part of these statements. -9- WISCONSIN PUBLIC SERVICE CORPORATION
===================================================================================================================== CONSOLIDATED STATEMENTS OF CAPITALIZATION SEPTEMBER 30 DECEMBER 31 (Thousands, except share amounts) 1995 1994 ===================================================================================================================== Common stock equity Common stock $95,588 $95,588 Premium on capital stock 73,605 73,605 Retained earnings 287,521 280,730 ESOP loan guarantees (18,657) (19,970) - --------------------------------------------------------------------------------------------------------------------- Total common stock equity 438,057 429,953 ===================================================================================================================== Preferred stock Cumulative, $100 par value, 1,000,000 shares authorized; with no mandatory redemption Series Shares Outstanding ------ ------------------ 5.00% 132,000 13,200 13,200 5.04% 30,000 3,000 3,000 5.08% 50,000 5,000 5,000 6.76% 150,000 15,000 15,000 6.88% 150,000 15,000 15,000 - --------------------------------------------------------------------------------------------------------------------- Total preferred stock 51,200 51,200 ===================================================================================================================== Long-term note to parent Series Year Due ------ -------- 8.76% 2014 6,122 6,176 ===================================================================================================================== Long-term debt First mortgage bonds Series Year Due ------ -------- 5-1/4% 1998 50,000 50,000 7.30% 2002 50,000 50,000 6.80% 2003 50,000 50,000 6-1/8% 2005 9,075 9,075 6.90% 2013 22,000 22,000 8.80% 2021 60,000 60,000 7-1/8% 2023 50,000 50,000 - --------------------------------------------------------------------------------------------------------------------- Total 291,075 291,075 Unamortized discount and premium on bonds, net (1,088) (1,153) - --------------------------------------------------------------------------------------------------------------------- Total first mortgage bonds 289,987 289,922 - --------------------------------------------------------------------------------------------------------------------- ESOP loan guarantees 18,657 19,970 Other long-term debt 47 53 - --------------------------------------------------------------------------------------------------------------------- Total long-term debt 308,691 309,945 ===================================================================================================================== Total capitalization $804,070 $797,274 =====================================================================================================================
[FN] The accompanying notes are an integral part of these statements. -10- WISCONSIN PUBLIC SERVICE CORPORATION
====================================================================================================== CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED (Thousands) SEPTEMBER 30 1995 1994 ====================================================================================================== Cash flows from operating activities Net income $44,482 $44,246 Adjustments to reconcile net income to net cash from operating activities Depreciation and decommissioning 48,991 42,108 Amortization of nuclear fuel and other 21,700 21,474 Deferred income taxes (3,808) (1,346) Investment tax credit restored (1,285) (1,403) AFUDC equity (127) (82) Pension income (9,919) (8,131) Postretirement funding 5,188 5,277 Deferred demand-side management expenditures (6,447) (7,338) Other, net (225) 79 Changes in Customer and other receivables 9,160 17,626 Accrued utility revenues 10,832 19,022 Fossil fuel 2,233 109 Gas in storage 1,103 252 Accounts payable (27,008) (20,416) Miscellaneous current and accrued liabilities 11,261 2,181 Accrued taxes 2,219 (1,503) - ------------------------------------------------------------------------------------------------------ Net cash from operating activities 108,350 112,155 ====================================================================================================== Cash flows from (used for) investing activities Construction and nuclear fuel expenditures (47,678) (46,025) Decommissioning funding (9,131) (3,649) Other 991 1,872 - ------------------------------------------------------------------------------------------------------ Net cash from (used for) investing activities (55,818) (47,802) ====================================================================================================== Cash flows from (used for) financing activities Redemption and maturities of first mortgage bonds - (1,000) Change in commercial paper (12,500) (11,000) Preferred stock dividends (2,333) (2,333) Cash dividends on common stock (32,858) (32,142) - ------------------------------------------------------------------------------------------------------ Net cash from (used for) financing activities (47,691) (46,475) ====================================================================================================== Net increase (decrease) in cash and equivalents 4,841 17,878 Cash and equivalents at beginning of period 3,449 5,391 ====================================================================================================== Cash and equivalents at end of period $8,290 $23,269 ====================================================================================================== Cash paid during period for Interest, less amount capitalized $16,289 $18,463 Income taxes 19,479 24,830 ======================================================================================================
[FN] The accompanying notes are an integral part of these statements. -11- WISCONSIN PUBLIC SERVICE CORPORATION
========================================================================================================= CONSOLIDATED STATEMENTS OF RETAINED EARNINGS Nine Months Ended (Thousands) September 30 1995 1994 ========================================================================================================= Balance at beginning of period $280,730 $288,693 Add Net income 44,482 44,246 - --------------------------------------------------------------------------------------------------------- 325,212 332,939 - --------------------------------------------------------------------------------------------------------- Deduct Cash dividends declared on preferred stock 2,333 3,111 Cash dividends declared on common stock 32,858 32,142 Dividend to parent 2,500 3,901 - --------------------------------------------------------------------------------------------------------- 37,691 39,154 - --------------------------------------------------------------------------------------------------------- Balance at end of period $287,521 $293,785 =========================================================================================================
[FN] The accompanying notes are an integral part of these statements. -12- WPS RESOURCES CORPORATION AND SUBSIDIARIES WISCONSIN PUBLIC SERVICE CORPORATION CONDENSED NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1995 NOTE 1. FINANCIAL INFORMATION ______________________________ The following consolidated financial statements have been prepared by WPS Resources Corporation ("Company") and Wisconsin Public Service Corporation ("WPSC"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and, in the opinion of Management, include all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of results for each period shown. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such SEC rules and regulations. The Company believes that the disclosures made are adequate to make the information presented not misleading. It is recommended that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company's and WPSC's latest annual reports on Form 10-K. Because of the seasonal nature of the Company's operations, interim results are not necessarily indicative of annual results. NOTE 2. REGULATORY ASSETS __________________________ In March 1995, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of. This Statement imposes stricter criteria for regulatory assets by requiring that such assets be probable of future recovery at each balance sheet date. WPSC anticipates adopting this standard on January 1, 1996 and does not expect that adoption will have a material impact on the financial position or results of operations of WPSC based on the current regulatory structure in which WPSC operates. This conclusion may change in the future as competitive factors influence wholesale and retail pricing in this industry. NOTE 3. RHINELANDER ENERGY CENTER __________________________________ On July 21, 1995, WPSC and Rhinelander Paper Company ("Rhinelander") announced the cancellation of their plans to construct the Rhinelander Energy Center ("REC"). The REC would have been a 123 megawatt cogeneration power plant which would have provided steam to -13- Rhinelander's facility in Rhinelander, Wisconsin and electricity to WPSC's customers. As a result of this cancellation, WPSC wrote off in the third quarter of 1995 its entire investment in this project. The charge, which totaled $2.7 million ($1.6 million after tax), was recorded as other expense, reducing net income by $.07 per share. -14- 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% of the Company's assets and revenues are derived from Wisconsin Public Service Corporation ("WPSC"), an electric and gas utility. OVERVIEW OF THIRD QUARTER OF 1995 COMPARED TO THIRD QUARTER OF 1994 The Company's earnings per share increased from $.54 in 1994 to $.66 in 1995, or 22.2%. The most significant reason was an increase in margins, due to increased revenues and lower fuel costs. These were partially offset by higher operating expenses, and a write-off of the investment in the canceled Rhinelander Energy Center ("REC") of $2.7 million ($1.6 million after tax), or $.07 a share. ELECTRIC OPERATIONS Electric margins increased by $6.1 million, or 7.1%, due to lower fuel costs and higher sales volumes. Third Quarter ___________________________ Electric Margins (000's) 1995 1994 ____ ____ Revenues $130,800 $124,340 Fuel and purchases 38,544 38,172 _______ _______ Margin $ 92,256 $ 86,168 ======= ======= Sales in kilowatt-hours (000) 2,859,730 2,722,774 Electric revenues increased $6.5 million, or 5.2% during the third quarter of 1995 compared to the third quarter of 1994. Electric revenues were higher due to a 5.0% increase in kilowatt-hour ("kWh") sales. This was offset partially by a 2.6% decrease in retail Wisconsin rates that took effect January 1, 1995. Residential kWh sales increased 14.4% due to warmer weather. Commercial and industrial kWh sales rose 4.2% reflecting customer growth and warmer weather. Wholesale kWh sales decreased 3.3% due primarily to lower demand by WPSC's largest wholesale customer. Electric fuels and purchases increased $0.4 million, or 1.0%, in the third quarter of 1995 compared to the same period in 1994. Even though there was an increase in coal-fired generation of 8.3%, or $1.9 million, coal related costs decreased 13.7%, or $1.7 million, due to -15- burning less expensive low sulphur coal. There was an increase in kWh purchases of 10.0%, or $.9 million due to the warmer weather. GAS OPERATIONS Gas margins increased $1.8 million in the third quarter of 1995 compared to the third quarter of 1994, due to weather related volume increases and improvements in margins at WPS Energy Services, Inc. ("WPSE"). Third Quarter _________________________ Gas Margins (000's) 1995 1994 ____ ____ Revenues $35,948 $27,917 Purchase costs 27,694 21,489 _______ _______ Margin $ 8,254 $ 6,428 ======= ======= Volume in Therms (000) 154,089 105,169 The Public Service Commission of Wisconsin ("PSCW") allows WPSC to pass on to its customers, through a purchased gas adjustment clause, changes in the cost of gas. Gas operating revenues increased $8.0 million, or 28.8%, during the third quarter of 1995 compared to the third quarter of 1994. Of the increase, $7.6 million is attributable to increased sales by WPSE, an energy marketing subsidiary which began operations in 1994. Higher weather related sales volume at WPSC was largely offset by lower per unit gas costs passed on to customers. Gas purchased for resale showed a net increase of $6.2 million, or 28.9%, in the third quarter of 1995 as compared to the same period in 1994. Increased gas purchases for WPSE of $7.0 million were the primary reason for this increase. OTHER Other operating expenses decreased $2.5 million, or 6.8%, during the third quarter of 1995 compared to the third quarter of 1994. The primary reason for this was lower employee benefit costs. Depreciation and decommissioning increased $2.5 million, or 18.1%, in the third quarter of 1995 compared to the same period in 1994. This was due primarily to an increase in decommissioning funding of $1.3 million that has been reflected in the rates that became effective January 1, 1995, and increased earnings on the decommissioning trusts that were offset by the increase discussed below. -16- Other income decreased by $2.4 million, or 160.1%, in the third quarter of 1995 compared to the same period in 1994. The primary factor was a $2.7 million write-off of the investment in the canceled REC project, and was partially offset by a $0.3 million increase in decommissioning trust earnings. Income taxes increased $2.2 million, or 32.0%, in the third quarter of 1995 compared to the same period in 1994, due primarily to higher earnings. OVERVIEW OF NINE MONTHS OF 1995 COMPARED TO NINE MONTHS OF 1994 Earnings per share were unchanged at $1.75 in 1995 as compared to 1994. Other expenses increased due primarily to the $2.7 million write-off of deferred costs related to the canceled REC project that reduced net income by $.07 per share. This charge was offset by increased electric margins. ELECTRIC OPERATIONS Electric margins increased by $8.2 million, or 3.3%, due primarily to lower fuel costs. Nine Months ___________________________ Electric Margins (000's) 1995 1994 ____ ____ Revenues $369,318 $363,842 Fuel and purchases 111,528 114,226 _______ _______ Margin $257,790 $249,616 ======= ======= Sales in kilowatt-hours (000) 8,287,455 7,916,713 Electric revenues increased $5.5 million, or 1.5%, during the first nine months of 1995 compared to the first nine months of 1994. Electric revenues were higher due to a 4.7% increase in kWh sales, and were offset in part by a 2.6% decrease in Wisconsin retail rates that took effect January 1, 1995. Residential kWh sales increased 4.9% due to weather. Commercial and industrial kWh sales rose 4.5% reflecting customer growth and weather impact. Wholesale kWh sales grew by 4.8%, due primarily to increased demand by WPSC's largest wholesale customer. Electric fuels and purchases decreased $2.7 million, or 2.4%, in the first nine months of 1995 compared to the same period in 1994. Coal related costs decreased $7.0 million due to burning less expensive low sulphur coal. This decrease was partially offset by an increase in coal-fired generation of 3.6%, and a 12.6% increase, or $3.6 million, in kWh purchases due to increased plant outages resulting from maintenance at some plants and to warmer than normal weather. -17- GAS OPERATIONS Gas margins were relatively flat. Nine Months _________________________ Gas Margins (000's) 1995 1994 ____ ____ Revenues $147,294 $140,421 Purchase costs 106,567 99,416 _______ _______ Margin $ 40,727 $ 41,005 ======= ======= Volume in Therms (000) 583,654 454,133 The Public Service Commission of Wisconsin ("PSCW") allows WPSC to pass on to its customers, through a purchased gas adjustment clause, changes in the cost of gas. Gas operating revenues increased $6.9 million, or 4.9%, during the first nine months of 1995 compared to the first nine months of 1994. The $6.9 million increase is comprised of a $22.3 million increase in revenues attributable to sales by WPSE, an energy marketing subsidiary which began operation in 1994, and offsetting decreases of $15.5 million due to warmer than normal weather and lower gas costs, and $4.7 million representing a refund from WPSC's primary gas supplier. (There was a reciprocal reduction recorded in gas purchased for resale as a result of this refund, thus there was no impact on net income.) Gas purchased for resale showed a net increase of $7.2 million, or 7.2%, in the first nine months of 1995 compared to the same period in 1994. Gas purchases increased $22.0 million due to WPSE sales and were offset by lower sales volume at WPSC due to weather and the $4.7 million refund discussed earlier. Maintenance increased by $3.1 million, or 8.8%, in the first nine months of 1995 compared to 1994 due to increased maintenance activity at WPSC's coal-fired and nuclear plants. Depreciation and decommissioning increased $6.9 million, or 16.3%, in the first nine months of 1995 compared to the same period in 1994. There were two primary factors for this increase. The first factor was an increase in decommissioning funding of $3.9 million reflected in the rates that became effective January 1, 1995. The second factor was additional depreciation of $1.1 million, recorded to offset the gain on the decommissioning portfolio discussed below and $.6 million in higher trust earnings. These maintain the balance between the depreciation reserve and the decommissioning trusts. -18- Other income increased by $1.2 million, or 31.8%, in the first nine months of 1995 compared to the same period in 1994. This increase was the result of three factors. The first factor was a $1.6 million pretax gain on the decommissioning portfolio from the sale of certain investments. The second factor was receipt of $1.2 million in insurance proceeds as the result of the death of a retired WPSC executive. The third factor, which offset these gains, was a $2.7 million write-off related to the canceled REC project. FINANCIAL CONDITION WPSC requires large investments in capital assets used to deliver electric and gas services. Most of the Company's capital expenditures relate to WPSC's construction expenditures. WPSC maintains good liquidity levels and a financial condition considered to be strong by utility analysts. Internally generated funds exceeded the Company's cash requirements resulting in the reduction of short-term borrowings during the first nine months of 1995, along with short-term investments. No funding difficulties are anticipated in the future. Pretax interest coverage was 4.1 times for the 12 months ended September 30, 1995 for WPSC. WPSC's bond ratings are AA+ (Standard & Poor's and Duff & Phelps) and Aa2 (Moody's). For the three-year period 1995 to 1997, internally generated funds are expected to lag construction expenditures and other investments totaling $280 million by about $42 million. These expenditures are comprised of $139 million for electric construction, $20 million for nuclear fuel, $51 million for gas construction, $19 million for other construction expenditures, and $51 million for nuclear decommissioning and other investments. The Company currently expects to finance this shortfall in internally generated funds through short-term debt. WPSC's Kewaunee nuclear plant is currently licensed through the year 2013. Physical decommissioning of the plant is expected to occur during the period 2014 to 2021 with additional expenditures being incurred during the period 2022 to 2050. The estimated decommissioning cost in current dollars is $155 million and the undiscounted year of expenditure amount is $785 million. Management does not anticipate decommissioning to have negative impacts on the Company's liquidity or capital resources since these costs are being funded through external decommissioning trusts. On January 1, 1995, WPSC reduced its Wisconsin retail electric rates by 2.6%. In March 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of, effective January 1, 1996. This statement imposes stricter criteria for regulatory assets by requiring that such assets be probable of future recovery at each balance sheet date. At this time, WPSC's management does not anticipate any material impact when -19- this new standard is adopted based on prior and current rate treatment of such costs. However, the PSCW has initiated proceedings to consider restructuring electric utility regulation in Wisconsin, and one of the issues on its agenda is stranded investment. Stranded investment is unrecovered investment in facilities that are no longer economical to operate. Therefore, the extent and impact of any change in the current regulatory compact is not known at this time. TRENDS The Company's non-regulated energy marketing subsidiary, WPS Energy Services, Inc., made two investments in October, 1995. It acquired an interest in a producing gas reserves operation and acquired a gas marketing operation. While these are not large acquisitions, they are initial efforts to enhance growth opportunities. -20- Part II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS The following documents are filed herewith: Exhibit 27 Financial Data Schedule WPS Resources Corporation Wisconsin Public Service Corporation -21- SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant, WPS Resources Corporation, has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. WPS Resources Corporation Date: October 30, 1995 /s/ D. L. Ford ________________________________ D. L. Ford Controller (Chief Accounting Officer) -22- SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant, Wisconsin Public Service Corporation, has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Wisconsin Public Service Corporation Date: October 30, 1995 /s/ D. L. Ford ____________________________________ D. L. Ford Controller (Chief Accounting Officer) -23- WPSC RESOURCES CORPORATION AND WISCONSIN PUBLIC SERVICE CORPORATION EXHIBIT INDEX TO FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995 Exhibit No. Description ___________ ___________ 27 Financial Data Schedule WPS Resources Corporation Wisconsin Public Service Corporation -24- EX-27 2
UT 0000107833 WISCONSIN PUBLIC SERVICE CORPORATION 1,000 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 PER-BOOK 866,888 81,501 134,545 98,869 0 1,181,803 95,588 73,605 268,864 438,057 0 51,200 308,691 10,000 6,122 0 0 0 0 0 0 814,070 487,934 23,178 405,968 429,146 58,788 5,166 63,954 19,472 44,482 2,333 42,149 32,858 16,289 108,350 1.76 1.76
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