-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, h45K7jV590fMLXKkezfy4vuBFhE/pt6ryr3WWEqZd4lVWpAzE4HIRdqLbdjNTGcd ukDXIGj/+EdkuiBegMnZqw== 0000314890-94-000008.txt : 19940822 0000314890-94-000008.hdr.sgml : 19940822 ACCESSION NUMBER: 0000314890-94-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940815 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WICOR INC CENTRAL INDEX KEY: 0000314890 STANDARD INDUSTRIAL CLASSIFICATION: 4924 IRS NUMBER: 391346701 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07951 FILM NUMBER: 94544103 BUSINESS ADDRESS: STREET 1: 626 E WISCONSIN AVE STREET 2: PO BOX 334 CITY: MILWAUKEE STATE: WI ZIP: 53202 BUSINESS PHONE: 4142917026 10-Q 1 WICOR FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 1994 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 June 30, 1994 or / / TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-7951 WICOR, Inc. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Wisconsin 39-1346701 ---------------------------------------------- ------------------ (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification No.) 626 East Wisconsin Avenue, PO Box 334, Milwaukee, Wisconsin 53201 ----------------------------------------------------------- ---------- (Address of principal executive office) (Zip Code) (414) 291-7026 ---------------------------------------------------- (Registrant's telephone number, including area code) 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 issuer's classes of common stock, as of the latest practicable date. Class Outstanding at June 30, 1994 -------------------------- ---------------------------- Common Stock, $1 Par Value 16,742,119 2 INTRODUCTION ------------------------------------------------------------------------ WICOR, Inc. ("WICOR" or "Company"), a corporation organized and existing under the laws of the State of Wisconsin, is an exempt holding company under the Public Utility Holding Company Act of 1935. It is the parent of Wisconsin Gas Company ("Wisconsin Gas"), a natural gas distribution public utility; Sta-Rite Industries, Inc. ("Sta-Rite"), a manufacturer of pumps and water processing equipment for the residential, irrigation and pool and spa markets; and SHURflo Pump Manufacturing Company ("SHURflo"), a manufacturer of pumps and fluid-handling equipment for the food service, recreational vehicle, marine, industrial and water purification markets. CONTENTS -------- PAGE ------ PART I. Financial Information.............................. 1 Management's Discussion and Analysis of Interim Financial Statements..................... 2-5 Consolidated Financial Statements of WICOR, Inc. (Unaudited): Consolidated Statement of Income for the Three and Six Months Ended June 30, 1994 and 1993.......... 6 Consolidated Balance Sheet as of June 30, 1994 and December 31, 1993............................ 7-8 Consolidated Statement of Cash Flows for the Six Months Ended June 30, 1994 and 1993.............. 9 Notes to Consolidated Financial Statements......... 10 PART II. Other Information.................................. 11-12 Signatures......................................... 13 3 Part I - Financial Information - - ------------------------------ Financial Statements -------------------- The following consolidated statements have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading. These condensed financial statements should be read in conjunction with the financial statements and the notes thereto included in the latest WICOR, Inc. annual report on Form 10-K and quarterly report on Form 10-Q. In the opinion of management, the information furnished reflects all adjustments, which in all circumstances were normal and recurring, necessary for a fair statement of the results of operations for the interim periods. Because of seasonal factors, the results of operations for the interim periods presented are not indicative of the results to be expected for the full calendar year. 4 Management's Discussion and Analysis of Interim Financial Statements of WICOR, Inc. Results of Operations - - --------------------- Consolidated net income for the second quarter of 1994 was $1.0 million or $0.4 million higher than the prior year. Net income increased by $4.7 million, or 19% for the six months ended June 30, 1994 compared to the same period of last year. The following factors have had a significant effect on the results of operations during the three- and six-month periods ended June 30, 1994. Gas Distribution - - ---------------- The net loss for the second quarter of 1994 increased by $1.0 million from $3.3 million to $4.3 million, while net income for the six months ended June 30, 1994 increased by $2.2 million to $20.6 million, compared to the same periods of last year. The increase in the net loss for the second quarter resulted from increased operating expenses (excluding cost of gas sold) which were not offset by an increase in gas margins. Warmer weather for the second quarter was the primary factor affecting margins. The increase in 1994 year-to-date net income was due primarily to colder than normal weather in the first quarter of 1994. Revenues, margins and volumes are summarized below. Margin, defined as revenues less cost of gas sold, is a better comparative performance indicator than revenues because the mix of volumes between sales and transportation service affects revenues but not margin. In addition, changes in the cost of gas sold are flowed through to revenue under a gas adjustment clause with no resulting effect on margin.
(Millions of Dollars) - - --------------------- Gas Sales Revenue $ 97.8 $110.2 (11) $337.9 $312.4 8 Cost of Gas Sold 65.5 78.7 (17) 218.8 207.7 5 ------ ------ ------ ------ Gas Sales Margin 32.3 31.5 3 119.1 104.7 14 Gas Transport Margin 1.5 2.3 (35) 3.6 5.5 (35) ------ ------ ------ ------ Total Margin $ 33.8 $ 33.8 - $122.7 $110.2 11 ====== ====== ====== ======
5
Three Months Six Months Ended June 30, Ended June 30, -------------- % -------------- % 1994 1993 Change 1994 1993 Change ------ ------ ------ ------ ------ ------ (Millions of Therms) - - -------------------- Sales Volumes Firm 112.7 127.1 (11) 514.0 494.3 4 Interruptible 61.3 42.5 44 146.8 101.6 44 Transportation Volume 26.4 42.6 (38) 61.1 103.6 (41) ------ ------ ------ ------ Total Throughput 200.4 212.2 (6) 721.9 699.5 3 ====== ====== ====== ====== Degree Days (Normal: 2nd Qtr. = 977 Six Months = 4,426) 843 1,003 (16) 4,506 4,350 4 ====== ====== ====== ======
The decrease in firm sales volumes for the second quarter of 1994 from last year was caused principally by warmer weather (14% warmer than normal). A 2.9% annual rate increase, which became effective on November 12, 1993, helped to offset the impact of the warmer weather resulting in no change in margin for the quarter. For the six-months ended June 30, 1994, the total margin increase was primarily due to the rate increase and growth in firm sales. For both the second quarter and year-to-date, the changes in volumes for interruptible sales and transportation services represent a transfer of customers between the two classes of service. Operations and maintenance expenses increased by $1.5 million, or 6%, and $7.6 million, or 14%, for the three- and six-month periods ended June 30, 1994, respectively, compared with the same periods of 1993. Included in year-to-date operations expenses is a first quarter, one-time charge of $2.7 million relating to the election by 131 employees of an early retirement option. It is estimated that the related savings from the retirements during the last three quarters of the year will substantially offset this first quarter charge. Increases in the provision for uncollectible accounts and software amortization were additional significant factors in the overall increase in operations and maintenance expenses for both the quarter and year-to-date. These increased expenses are being recovered under the November 1993 rate increase. Depreciation expense increased for both the quarter and year-to-date due to recent capital additions. For the second quarter and year-to-date, when compared to 1993, interest expense on long-term debt decreased primarily as a result of lower interest rates achieved through a $45 million long- term debt refinancing in September 1993. Other interest expense decreased in the second quarter primarily from lower levels of short-term debt. The increase in year-to-date other interest expense is due to the amortization of previously deferred interest related to the financing of gas in storage. Income tax expense for the year-to-date increased primarily due to 6 higher pre-tax income and a 1% increase in the federal income tax rate which was not reflected until the third quarter of 1993. Wisconsin Gas received its most recent rate increase from the Public Service Commission of Wisconsin (PSCW) in November 1993. In July 1993 Wisconsin Gas proposed an alternative method of ratemaking which provided for an indexed rate cap and a weather adjustment mechanism (WAM). The PSCW has given initial approval to an alternative approach with a three year rate freeze (without the WAM) based on the rates approved in November 1993. The PSCW has given Wisconsin Gas the option of either accepting the modified proposal or filing a traditional rate case in March 1995 with new rates becoming effective in November 1995. Wisconsin Gas will not make a decision until after the final PSCW Order is received later this year. Manufacturing - - ------------- Manufacturing net income for the second quarter of $5.3 million was 36% better than last year's net income of $3.9 million. For the six-months ended June 30, 1994 manufacturing net income increased by 41% to $8.6 million compared to the same period last year. This improvement resulted from increased sales as well as improved operating efficiencies. Net sales were $86.7 million for the second quarter of 1994, up 12% from the comparable period in 1993. For the first six months of 1994 net sales increased by 14% to $165.2 million compared to the same period in 1993. Improved domestic market conditions, increased international sales, and the introduction of new products contributed to the sales growth. Domestic sales in the quarter increased over the second quarter of 1993 by 11%, while international sales increased by 13%. On a year to date basis, domestic sales increased by 12% and international sales increased by 17% over the same periods in 1993. For the six-months ended June 30, 1994 international sales accounted for 35% of total net sales. New product sales, including several new pumps sold in the European market, also contributed to the increase in sales. Improvements were seen in the Australian markets as their economy continues to recover and as results for 1994 include the operations of Dega Research Pty. Ltd., a pool equipment manufacturer, which was acquired in November 1993. Substantial improvements were seen in the water system, recreational vehicle, industrial, and water purification markets. Gross profit margins increased from 27% to 30% for the second quarter as compared to 1993. For the six-months ended June 30, 1994 and 1993, the gross profit margin was 29% and 28%, respectively. Operating expenses as a percentage of sales for the year-to-date as compared to 1993 declined from 21% to 20%. Year-to-date operating expenses increased in 1994 over 1993 by $2.7 million. This was due primarily to higher selling expenses associated with the higher level of sales. Lower interest expense, mostly due to lower debt levels, also contributed to improved earnings for the quarter and year-to-date. 7 Non-Operating Income and Income Taxes - - ------------------------------------- Interest expense was down slightly for the first three- and six- months of 1994, in comparison to 1993, due primarily to a $45.0 million long-term debt refinancing in September 1993 in the gas distribution business and, also, to lower levels of short-term debt throughout the Company. Income tax expense was $3.7 million higher for the first six months of 1994, compared to the same period last year, reflecting increased pre-tax income and a 1% increase in the federal income tax rate. Financial Condition - - ------------------- Cash flow from operations increased by $71.2 million from 1993 to $130.9 million for the first six months of 1994. The improvement is in part due to the increase in net income, plus increased depreciation and deferred taxes. Higher gas in storage at the beginning of the year resulted in $36.7 million of reduced requirements for gas purchases in the first six months of 1994 compared to 1993. The first six months of 1994 also benefitted from recovery of demand charges over the heating season in 1994, rather throughout the year in 1993. This will reverse in the last two quarters of 1994. Accrued taxes reduced cash from operations in 1994 while providing additional cash in 1993. This was due to the use in 1993 of higher than normal prepaid tax balances as of the end of 1992. The increase in cash from other non-current assets and liabilities was a result of increased amortization of the deferred provision for uncollectible accounts, recognition of a deferred regulatory liability for environmental clean-up cost recoveries, and a net increase in the liability for postretirement benefits. Capital expenditures for the six months ended June 30, 1994 amounted to $20.7 million and additional capital expenditures of $45.0 million are expected for the remainder of 1994. Gas distribution capital expenditures are expected to increase substantially in 1994 over 1993 as several expansion projects are underway. More short-term borrowings were repaid in the first six months of 1994 than in 1993 because of the higher level of short-term debt at December 31, 1993 versus December 31, 1992. The higher level of short-term debt was needed to finance gas in storage. There will be a need for additional short-term borrowing during the remainder of 1994 primarily to finance gas in storage. On July 26, 1994, the directors of the Company authorized an increase in the Company's dividend on common stock to $.40 per quarter ($1.60 per share on an annual basis). The first quarterly payment at the new level will be made August 31, 1994 to shareholders of record on August 12, 1994. 8 WICOR, INC. Consolidated Statement of Income (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, ---------------------- ---------------------- 1994 1993 1994 1993 ---------- ---------- ---------- ---------- (Thousands of Dollars) (Thousands of Dollars) Operating Revenues: Gas distribution............... $ 99,349 $ 112,448 $ 341,497 $ 317,874 Manufacturing and other........ 86,730 77,775 165,207 145,009 ---------- ---------- ---------- ---------- 186,079 190,223 506,704 462,883 ---------- ---------- ---------- ---------- Operating Costs and Expenses: Cost of gas sold............... 65,468 78,671 218,759 207,668 Manufacturing cost of sales.... 61,052 56,922 117,234 103,694 Operations and maintenance..... 44,275 40,242 95,889 85,524 Depreciation and amortization.. 7,398 6,297 14,728 13,742 Taxes, other than income taxes. 2,386 2,210 5,150 4,685 ---------- ---------- ---------- ---------- 180,579 184,342 451,760 415,313 ---------- ---------- ---------- ---------- Operating Income ................ 5,500 5,881 54,944 47,570 ---------- ---------- ---------- ---------- Other Income (Deductions): Interest expense............... (3,909) (4,398) (8,208) (9,037) Interest income................ 197 159 286 300 Other, net..................... (206) (306) (76) (280) ---------- ---------- ---------- ---------- (3,918) (4,545) (7,998) (9,017) ---------- ---------- ---------- ---------- Income Before Income Taxes....... 1,582 1,336 46,946 38,553 Income Taxes..................... 584 760 17,746 14,042 ---------- ---------- ---------- ---------- Net Income....................... $ 998 $ 576 $ 29,200 $ 24,511 ========== ========== ========== ========== Per Share of Common Stock: Income Per Common Share........ $ 0.06 $ 0.04 $ 1.76 $ 1.54 ========== ========== ========== ========== Cash Dividends Per Common Share $ 0.39 $ 0.38 $ 0.78 $ 0.76 ========== ========== ========== ========== Average Common Shares Outstanding (Thousands)....... 16,640 16,013 16,559 15,932
The accompanying notes are an integral part of this statement. 9 WICOR, INC. Consolidated Balance Sheet
June 30, 1994 December 31, (Unaudited) 1993 Assets ------------ ------------ - - ------ (Thousands of Dollars) Current Assets: Cash and cash equivalents......................... $ 17,263 $ 22,953 Accounts receivable, less allowance for doubtful accounts of $10,969,000 and $9,351,000, respectively........................ 132,094 111,408 Accrued utility revenues.......................... 6,877 53,483 Manufacturing inventories......................... 58,162 58,079 Gas in storage, at weighted average cost.......... 22,825 44,697 Deferred income taxes............................. 11,234 10,005 Prepayments and other............................. 19,874 13,969 ------------ ------------ 268,329 314,594 Property, Plant and Equipment (less accumulated ------------ ------------ depreciation of $394,776,000 and $377,004,000, respectively)................................... 401,316 400,700 ------------ ------------ Deferred Charges and Other: Deferred systems development costs................ 36,398 38,808 Other regulatory assets........................... 54,557 57,211 Deferred environmental costs...................... 42,005 41,641 Prepaid pension costs............................. 30,283 29,580 Gas transition costs.............................. 11,208 15,485 Other............................................. 34,160 35,707 ------------ ------------ 208,611 218,432 ------------ ------------ $ 878,256 $ 933,726 ============ ============
The accompanying notes are an integral part of this statement. 10 WICOR, INC. Consolidated Balance Sheet
June 30, 1994 December 31, (Unaudited) 1993 Liabilities and Capitalization ------------ ------------ - - ------------------------------ (Thousands of Dollars) Current Liabilities: Accounts payable.................................. $ 55,312 $ 62,683 Refundable gas costs ............................. 40,902 15,596 Short-term borrowings............................. 20,831 134,918 Current portion of long-term debt................. 3,007 2,847 Accrued taxes..................................... 9,095 10,089 Accrued payroll and benefits...................... 17,983 14,656 Other............................................. 17,537 15,199 ------------ ------------ 164,667 255,988 ------------ ------------ Deferred Credits and Other: Unamortized investment tax credit................. 8,240 8,654 Environmental remediation costs................... 39,450 40,000 Deferred income taxes............................. 48,614 45,878 Gas transition costs.............................. 11,208 15,485 Other regulatory liabilities...................... 56,583 50,179 Postretirement benefit obligation................. 69,644 67,510 Other............................................. 17,087 14,526 ------------ ------------ 250,826 242,232 ------------ ------------ Capitalization: Long-term debt.................................... 167,461 165,230 Common stock...................................... 16,742 16,407 Other paid-in capital............................. 174,544 166,710 Retained earnings ................................ 110,923 94,643 Unearned compensation - ESOP...................... (6,907) (7,484) ------------ ------------ 462,763 435,506 ------------ ------------ $ 878,256 $ 933,726 ============ ============
The accompanying notes are an integral part of this statement. 11 WICOR, INC. Consolidated Statement of Cash Flows (Unaudited)
Six Months Ended June 30, ----------------------- 1994 1993 ---------- ---------- (Thousands of Dollars) Operations: Net income.......................................... $ 29,200 $ 24,511 Adjustments to reconcile net income to net cash flows: Depreciation and amortization..................... 23,818 21,539 Deferred income taxes............................. 1,507 204 Change in: Receivables..................................... 25,920 24,924 Manufacturing inventories....................... (83) (1,690) Gas in storage.................................. 21,872 (14,850) Other current assets............................ (5,721) (1,085) Systems development costs....................... (403) (3,691) Accounts payable................................ (7,371) (11,825) Refundable gas costs............................ 25,306 11,360 Accrued taxes................................... (207) 8,685 Accrued payroll and benefits.................... 3,327 4,421 Other current liabilities....................... 1,367 (789) Other non-current assets and liabilities, net... 12,339 (1,978) ---------- ---------- 130,871 59,736 ---------- ---------- Investment Activities: Capital expenditures.............................. (20,665) (22,612) Net proceeds from sale of assets.................. - 4,182 Acquisitions...................................... - (1,231) Other ............................................ 126 51 ---------- ---------- (20,539) (19,610) ---------- ---------- Financing Activities: Change in short-term borrowings................... (109,087) (17,869) Issuance of long-term debt........................ - 169 Reduction in long-term debt ...................... (2,185) (3,890) Issuance of common stock ......................... 6,639 7,855 Dividends paid on common stock, less amounts reinvested ............................ (11,389) (10,259) ---------- ---------- (116,022) (23,994) ---------- ---------- Change in Cash and Cash Equivalents................... (5,690) 16,132 Cash and Cash Equivalents at Beginning of Period...... 22,953 16,632 ---------- ---------- Cash and Cash Equivalents at End of Period............ $ 17,263 $ 32,764 ========== ==========
The accompanying notes are an integral part of this statement. 12 Notes to Consolidated Financial Statements (Unaudited): 1) At June 30, 1994 WICOR had borrowings of $14.5 million and availability of $103.2 million under unsecured lines of credit with several banks. A total of $6.3 million of commercial paper was outstanding as of June 30, 1994 at a weighted average interest rate of 4.5%. 2) For purposes of the Consolidated Statement of Cash Flows, income taxes paid, net of refunds, and interest paid (excluding capitalized interest) were as follows: [CAPTION] For the six months ended June 30, ---------------------- 1994 1993 ---------- ---------- (Thousands of Dollars) Income taxes paid $ 22,135 $ 7,211 Interest paid $ 8,120 $ 8,674
3) In July 1993, Wisconsin Gas submitted an incentive rate making proposal to the Public Service Commission of Wisconsin ("PSCW"). In its April 1994 initial decision, the PSCW significantly modified the Company's proposal. Under the modified proposal, the Company's rates will be subject to a three year rate freeze based on the rates approved in November, 1993. The Company will also be required to reduce its rates by $10.1 million, to reflect a reduction in certain non-cash expenses. This rate reduction will result in no net income impact, but will reduce cash flow. The PSCW has given the Company the option of either accepting the modified proposal or filing a traditional rate case in March 1995 with new rates becoming effective in November, 1995. Wisconsin Gas will not make a decision until after the final PSCW Order is received later this year. 4) In January 1994, Wisconsin Gas offered a voluntary early retirement incentive plan to employees age 55 and over. A total of 131 employees elected to retire under the provisions of this incentive plan. The Company recorded a charge, which includes the impact on the pension and postretirement benefit plans, to operating expense of $2.7 million in the first quarter of 1994. 5) Prior year financial statement amounts have been restated to reflect the merger with SHURflo in 1993, which was accounted for as a pooling of interests. 13 Part II - Other Information ----------------- Item 1. Legal Proceedings - - ------------------------- General - On June 16, 1994, the Supreme Court of Wisconsin issued a decision in a matter, not involving WICOR or its subsidiaries, which holds in general that comprehensive general liability insurance policies may not provide coverage for response costs involving Wisconsin sites under Federal or State environmental clean-up statutes in certain circumstances. On July 5, 1994, Wisconsin Gas and Sta-Rite joined more than 50 other Wisconsin businesses, the Wisconsin Department of Justice, the Wisconsin Department of Natural Resources and several other groups and individual firms in urging the Supreme Court to reconsider its decision. Wisconsin Gas - During the first quarter of 1994, Wisconsin Gas initiated suit against certain of its liability insurance carriers for coverage for environmental property damage associated with former manufactured gas plants. The insurance carriers named as defendants in the suit instituted by Wisconsin Gas have recently moved to dismiss the case, contending that the decision of the Supreme Court of Wisconsin discussed above makes it questionable as to whether they will be obligated to reimburse Wisconsin Gas for such costs. Wisconsin Gas has opposed the motion. Wisconsin Gas is continuing to litigate its claims and is in various stages of negotiations with its insurance carriers regarding settlement of the litigation. A trial in the matter is scheduled for January 9, 1995. Based on recent PSCW orders, the Company currently believes that any cleanup costs not recoverable from its insurance carriers will be allowed full recovery in rates (net of carrying costs). Sta-Rite - On July 13, 1994, Sta-Rite was notified by the Wisconsin Department of Natural Resources (the "WDNR") that the WDNR believes that solvents used at a manufacturing site previously operated by Sta- Rite have migrated and have caused or contributed to the contamination of a Deerfield, Wisconsin municipal well and surrounding property. The population of Deerfield is approximately 1,260 persons. Sta-Rite is currently conducting an investigation regarding the allegations raised by the WDNR. The WDNR has not proposed a plan of remediation regarding the site and Sta-Rite cannot estimate at the present time what costs, if any, it may incur for this remediation nor, in light of the Supreme Court of Wisconsin decision discussed above, whether any costs incurred will be covered by insurance. On August 3, 1994, the Michigan Department of Natural Resources notified Sta-Rite that its American Sanitary Division, which Sta-Rite operated from March 1969 until it was sold in May 1977, allegedly contributed to contamination at a facility in Grand Rapids, Michigan. As a generator of certain substances discovered at the Michigan site, Sta-Rite has been named, (along with various other entities some of which are larger and some of which are smaller than Sta-Rite) as a potentially responsible party with respect to this site. Sta-Rite is currently reviewing available records and gathering information regarding this matter. At this time, Sta-Rite is unable to 14 estimate what costs, if any, it may incur in connection with remediation of this site. The Company is investigating whether its general liability insurance provides coverage for any remediation costs it may incur. Sta-Rite and other submersible pump manufacturers are parties to lawsuits filed in California by the Attorney General of the State of California, the Environmental Defense Fund and the Natural Resources Defense Council. Details regarding this litigation were previously reported in the Company's FORM 10-Q for the quarter ended March 31, 1994. Item 4. Submission of Matters to a Vote of Security Holders - - ----------------------------------------------------------- At the Company's annual meeting of shareholders held on April 28, 1994, Willie D. Davis, James L. Forbes, Guy A. Osborn and William B. Winter were elected as directors of the Company for terms expiring in 1997. The following table sets forth certain information with respect to the election of directors at the annual meeting: [CAPTION] Shares Withholding Name of Nominee Shares voted For Authority - - -------------------- ------------------ ---------------- Willie D. Davis 13,392,053 256,885 James L. Forbes 13,395,295 253,643 Guy A. Osborn 13,400,729 248,209 William B. Winter 13,385,037 263,901
The following table sets forth the other directors of the Company whose terms of office continued after the 1994 annual meeting:
Year in Which Name of Director Term Expires - - ------------------------- --------------- Wendell F. Bueche 1995 Daniel F. McKeithan, Jr. 1995 George E. Wardeberg 1995 Essie M. Whitelaw 1995 Jere D. McGaffey 1996 Thomas F. Schrader 1996 Stuart W. Tisdale 1996
In addition, at the annual meeting, shareholders approved the WICOR, Inc. 1994 Long-Term Performance Plan. With respect to such matter, the number of shares voted for and against were 12,569,139 and 693,478, respectively. The number of shares abstaining were 386,321. There were no shares subject to broker non-votes. 15 Item 6. Exhibits and Reports on Form 8-K - - ---------------------------------------- (a) Exhibits 10.1 WICOR, Inc. 1994 Long-Term Performance Plan. (b) Reports on Form 8-K - There were no reports on Form 8-K filed for the second quarter of 1994. 16 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. WICOR, INC. Dated: August 12, 1994 By: /s/ Joseph P. Wenzler ----------------------------- Joseph P. Wenzler Vice President, Treasurer and Chief Financial Officer EX-10 2 EXHIBIT 10.1 1 EXHIBIT 10.1 WICOR, INC. 1994 LONG-TERM PERFORMANCE PLAN Section 1. Purpose - - ------------------- The purpose of the WICOR, Inc. 1994 Long-Term Performance Plan (the "Plan") is to enhance the ability of WICOR, Inc. (together with any successor thereto, the "Company") and its Affiliates (as defined below) to attract, retain and motivate key salaried employees upon whom, in large measure, the sustained growth and profitability of the Company depend and to provide incentives to such key salaried employees which are more directly linked to the profitability of the Company's businesses and increases in shareholder value. Section 2. Definitions - - ----------------------- As used in the Plan, the following terms shall have the respective meanings set forth below: (a) "Affiliate" shall mean any entity that, directly or through one or more intermediaries, is controlled by, controls, or is under common control with, the Company. (b) "Award" shall mean any Option, Stock Appreciation Right or Restricted Stock granted under the Plan. (c) "Award Agreement" shall mean any written agreement, contract, or other instrument or document evidencing any Award granted under the Plan. (d) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. (e) "Commission" shall mean the United States Securities and Exchange Commission or any successor agency. (f) "Committee" shall mean a committee of the Board of Directors of the Company designated by such Board to administer the Plan and composed of not less than two directors, each of whom is a "disinterested person" within the meaning of Rule 16b-3. (g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time. (h) "Fair Market Value" shall mean, with respect to any property (including, without limitation, any Shares or other securities), the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Committee. (i) "Incentive Stock Option" shall mean an Option granted under Section 6(a) of the Plan that is intended to meet the requirements of Section 422 of the Code, or any successor provision thereto. 2 (j) "Key Salaried Employee" shall mean any officer or other key salaried employee of the Company or of any Affiliate who is responsible for or contributes to the management, growth or profitability of the business of the Company or any Affiliate as determined by the Committee. (k) "Non-Qualified Stock Option" shall mean an Option granted under Section 6(a) of the Plan that is not intended to be an Incentive Stock Option. (l) "Option" shall mean an Incentive Stock Option or a Non- Qualified Stock Option. (m) "Participant" shall mean a Key Salaried Employee designated to be granted an Award under the Plan. (n) "Person" shall mean any individual, corporation, partnership, association, limited liability company, joint-stock company, trust, unincorporated organization, or government or political subdivision thereof. (o) "Released Securities" shall mean Shares of Restricted Stock with respect to which all applicable restrictions have expired, lapsed, or been waived. (p) "Restricted Securities" shall mean Awards of Restricted Stock or other Awards under which issued and outstanding Shares are held subject to certain restrictions. (q) "Restricted Stock" shall mean any Shares granted under Section 6(c) of the Plan. (r) "Rule 16b-3" shall mean Rule 16b-3 as promulgated by the Commission under the Exchange Act, or any successor rule or regulation thereto. (s) "Shares" shall mean shares of common stock of the Company and such other securities or property as may become subject to Awards pursuant to an adjustment made under Section 4(b) of the Plan. (t) "Stock Appreciation Right" shall mean any right granted under Section 6(b) of the Plan. (u) "Total Shareholder Return" shall mean the appreciation of the price of a share of common stock of the Company, plus the value of dividends paid thereon assuming reinvestment in common stock of the Company. Section 3. Administration - - -------------------------- The Plan shall be administered by the Committee; provided, however, that if at any time the Committee shall not be in existence, the functions of the Committee as specified in the Plan shall be exercised by those members of the Board of Directors of the Company who qualify as "disinterested persons" under Rule 16b-3. Subject to the terms of the Plan and applicable law, the Committee shall have full power and authority to: (i) designate Participants; (ii) determine the type or 3 types of Awards to be granted to each Participant under the Plan; (iii) determine the number of Shares to be covered by (or with respect to which payments, rights, or other matters are to be calculated in connection with) Awards granted to Participants; (iv) determine the terms and conditions of any Award granted to a Participant; (v) determine whether, to what extent, and under what circumstances Awards granted to Participants may be settled or exercised in cash, Shares, other securities, other Awards, or other property, or canceled, forfeited, or suspended to the extent permitted in Section 7 of the Plan, and the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended; (vi) determine whether, to what extent, and under what circumstances cash, Shares, other securities, other Awards, other property, and other amounts payable with respect to an Award granted to Participants under the Plan shall be deferred either automatically or at the election of the holder thereof or of the Committee; (vii) interpret and administer the Plan and any instrument or agreement relating to, or Award made under, the Plan (including, without limitation, any Award Agreement); (viii) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (ix) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time, and shall be final, conclusive, and binding upon all Persons, including the Company, any Affiliate, any Participant, any holder or beneficiary of any Award, any shareholder, and any employee of the Company or of any Affiliate. The Committee shall solicit and consider the recommendations of the Chief Executive Officer of the Company with regard to, among other things, the designation of Participants, the type of Awards to be granted under the Plan to such Participants and the number of Shares to be subject thereto, and the other terms and conditions of Awards granted to Participants, subject to the limitations of Rule 16b-3. Section 4. Shares Available for Award - - -------------------------------------- (a) Shares Available --- Subject to adjustment as provided in Section 4(b): (i) Number of Shares Available --- The total number of Shares with respect to which Awards may be granted under the Plan shall be 820,000. If, after the effective date of the Plan, any Shares covered by an Award granted under the Plan, or to which any Award relates, are forfeited or if an Award otherwise terminates, expires or is canceled prior to the delivery of all of the Shares or of other consideration issuable or payable pursuant to such Award and if such forfeiture, termination, expiration or cancellation occurs prior to the payment of dividends or the exercise by the holder of other indicia of ownership of the Shares to which the Award relates, then the number of Shares counted against the number of Shares available under the Plan in connection with the grant of such Award, to the extent of any such forfeiture, termination, expiration or cancellation, shall again be available for granting of additional Awards under the Plan; provided, 4 however, that if an Award covering additional Shares is granted to a Participant in connection with such forfeiture, termination, expiration or cancellation, then the Shares subject to the forfeiture, termination, expiration or cancellation shall be counted against the total number of Shares with respect to which Awards may be granted under the Plan and the maximum number of Shares that may be the subject of Awards granted to individual Participants under the Plan in an amount equal to the number of Shares to which such additional grant relates. (ii) Limitation on Awards to Individual Participants --- No Participant shall be granted Awards that could result in such Participant exercising Options for, or Stock Appreciation Rights with respect to, more than 125,000 Shares or receiving more than 25,000 Shares of Restricted Stock under the Plan. (iii) Accounting for Awards --- The number of Shares covered by an Award under the Plan, or to which such Award relates, shall be counted on the date of grant of such Award against the number of Shares available for granting Awards under the Plan; provided, however, that if Options and Stock Appreciation Rights are granted in tandem and the exercise of either an Option or Stock Appreciation Right results in an offsetting reduction in the number of Options or Stock Appreciation Rights subject to the Award, then the number of Shares to which such Award relates shall only be counted against the number of Shares available for granting Awards under the Plan to the extent of the aggregate number of Shares as to which such Award may be exercised. (iv) Sources of Shares Deliverable Under Awards --- Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or of treasury Shares. (b) Adjustments --- In the event that the Company shall pay a dividend on its common stock in Shares, effect a stock split, or effect a similar corporate transaction or event that affects the Shares such that an adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the number of Shares subject to the Plan and which thereafter may be made the subject of Awards and the number of Shares subject to outstanding Awards under the Plan, and the exercise and grant prices thereof, shall be equitably adjusted by the Committee/such that the number of Shares, as adjusted, shall bear the same relation to the total number of outstanding shares of common stock of the Company following the transaction or event as immediately prior to such transaction or event; provided, however, in each case, that with respect to Awards of Incentive Stock Options no such adjustment shall be authorized to the extent that such authority would cause the Plan to violate Section 422(b)(1) of the Code or any successor provision thereto; and provided further, however, that the number of Shares subject to any Award payable or denominated in Shares shall always be a whole number. Section 5. Eligibility - - ----------------------- Any Key Salaried Employee, including any executive officer or employee who is also a director of the Company or of any Affiliate, who is not a member of the Committee shall be eligible to be designated 5 a Participant. Section 6. Awards - - ------------------ (a) Options --- The Committee is hereby authorized to grant Options to Participants with the terms and conditions as set forth below and with such additional terms and conditions, in either case not inconsistent with the provisions of the Plan, as the Committee shall determine; provided, however, that no Option shall be granted, directly or indirectly, in connection with the forfeiture, termination, cancellation or expiration of an Option previously granted under the Plan prior to its normal expiration date if such forfeited, terminated, canceled or expired Option has an exercise price higher than the Option proposed to be granted. (i) Exercise Price --- The exercise price per Share under an Option shall be determined by the Committee; provided, however, that such exercise price shall not be less than 100% of the Fair Market Value of a Share on the date of grant of such Option; and provided further, that such exercise price shall not be adjusted following the date of grant of such Option except as provided in Section 4(b) hereof. (ii) Option Term --- The term of each Option shall be fixed by the Committee; provided, however, that in no event shall the term of any Option exceed a period of ten years from the date of its grant. (iii) Exercisability and Method of Exercise --- An Option shall become exercisable in such manner and within such period or periods and in such installments or otherwise as shall be determined by the Committee. The Committee also shall determine the method or methods by which, and the form or forms, including, without limitation, cash, Shares, other securities, other Awards, or other property, or any combination thereof, having a Fair Market Value on the exercise date equal to the relevant exercise price, in which payment of the exercise price with respect to any Option may be made or deemed to have been made. (iv) Incentive Stock Options --- The terms of any Incentive Stock Option granted under the Plan shall comply in all respects with the provisions of Section 422 of the Code, or any successor provision thereto, and any regulations promulgated thereunder. (b) Stock Appreciation Rights --- The Committee is hereby authorized to grant Stock Appreciation Rights to Participants. Subject to the terms of the Plan and any applicable Award Agreement, a Stock Appreciation Right granted under the Plan shall confer on the holder thereof a right to receive, upon exercise thereof, the excess of (i) the Fair Market Value of one Share on the date of exercise over (ii) the grant price of the right as specified by the Committee, which shall not be less than the Fair Market Value of one Share on the date of grant of the Stock Appreciation Right. Subject to the terms of the Plan, the grant price, term, methods of exercise, methods of settlement (including whether the Participant will be paid in cash or Shares, or a combination thereof), and any other terms and conditions of any Stock Appreciation Right shall be as determined by the Committee; provided, however, that 6 the grant price of a Stock Appreciation Right may not be adjusted following the date of grant of such Stock Appreciation Right except as provided in Section 4(b) hereof. The Committee may impose such conditions or restrictions on the exercise of any Stock Appreciation Right as it may deem appropriate, including, without limitation, restricting the time of exercise of the Stock Appreciation Right to specified periods as may be necessary to satisfy the requirements of Rule 16b-3. (c) Restricted Stock Awards --- (i) Issuance --- The Committee is hereby authorized to grant Awards of Restricted Stock to Participants. (ii) Restrictions --- Shares of Restricted Stock granted to Participants shall be subject to such restrictions as the Committee may impose, which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise, as the Committee may deem appropriate. (iii) Performance Criteria --- The restrictions applicable to Company executives and the Chairman and President of each subsidiary of the Company shall be based on the criteria of attaining over a period of at least three years a compounded annual percentage rate of Total Shareholder Return compared to a specified group of gas distribution utilities. The restrictions applicable to other executives of the subsidiaries shall be as determined by the Committee. (iv) Registration --- Any Restricted Stock granted under the Plan to a Participant may be evidenced in such manner as the Committee may deem appropriate. In the event any stock certificate is issued in respect of Shares of Restricted Stock granted under the Plan to a Participant, such certificate shall be registered in the name of the Participant and shall bear an appropriate legend (as determined by the Committee) referring to the terms, conditions, and restrictions applicable to such Restricted Stock. (v) Payment of Restricted Stock --- At the end of the applicable restriction period relating to Restricted Stock granted to a Participant, one or more stock certificates for the appropriate number of Shares, free of restrictions, shall be delivered to the Participant, or, if the Participant received stock certificates representing the Restricted Stock at the time of grant, the legends placed on such certificates shall be removed. (vi) Forfeiture --- Except as otherwise determined by the Committee, upon termination of employment of a Participant (as determined under criteria established by the Committee) for any reason during the applicable restriction period, all Shares of Restricted Stock still subject to restriction shall be forfeited by the Participant and reacquired by the Company. (d) General --- (i) No Consideration for Awards --- Awards shall be granted to Participants for no cash consideration unless otherwise 7 determined by the Committee. (ii) Award Agreements --- Each Award granted under the Plan shall be evidenced by an Award Agreement in such form (consistent with the terms of the Plan) as shall have been approved by the Committee. (iii) Awards May Be Granted Separately or Together --- Awards to Participants under the Plan may be granted either alone or in addition to, in tandem with, or in substitution for any other Award or any award granted under any other plan of the Company or any Affiliate. Awards granted in addition to or in tandem with other Awards, or in addition to or in tandem with awards granted under any other plan of the Company or any Affiliate, may be granted either at the same time as or at a different time from the grant of such other Awards or awards. (iv) Limits on Transfer of Awards --- No Award (other than Released Securities), and no right under any such Award, shall be assignable, alienable, saleable, or transferable by a Participant otherwise than by will or by the laws of descent and distribution (or, in the case of an Award of Restricted Securities, to the Company); provided, however, that a Participant at the discretion of the Committee may be entitled, in the manner established by the Committee, to designate a beneficiary or beneficiaries to exercise his or her rights, and to receive any property distributable, with respect to any Award upon the death of the Participant. Each Award, and each right under any Award, shall be exercisable, during the lifetime of the Participant, only by such individual or, if permissible under applicable law, by such individual's guardian or legal representative. No Award (other than Released Securities), and no right under any such Award, may be pledged, alienated, attached, or otherwise encumbered, and any purported pledge, alienation, attachment, or encumbrance thereof shall be void and unenforceable against the Company or any Affiliate. (v) Term of Awards --- Except as otherwise provided in the Plan, the term of each Award shall be for such period as may be determined by the Committee. (vi) Rule 16b-3 Six-Month Limitations --- To the extent required in order to comply with Rule 16b-3 only, any equity security offered pursuant to the Plan may not be sold for at least six months after acquisition, except in the case of death or disability, and any derivative security issued pursuant to the Plan shall not be exercisable for at least six months, except in case of death or disability of the holder thereof. Terms used in the preceding sentence shall, for the purposes of such sentence only, have the meanings, if any, assigned or attributed to them under Rule 16b-3. (vii) Share Certificates; Representation by Participants -- - - - In addition to the restrictions imposed pursuant to Section 6(c) hereof, all certificates for Shares delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the Commission, any stock exchange or other market upon which such Shares are then listed or traded, and any applicable federal or state 8 securities laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. The Committee may require each Participant or other Person who acquires Shares under the Plan by means of an Award originally made to a Participant to represent to the Company in writing that such Participant or other Person is acquiring the Shares without a view to the distribution thereof. Section 7. Amendment and Termination; Waiver of Conditions - - ----------------------------------------------------------- (a) Amendments to the Plan --- The Board of Directors of the Company may amend, alter, suspend, discontinue, or terminate the Plan at any time; provided, however, that no amendment, alteration, suspension, discontinuation or termination of the Plan shall in any manner (except as otherwise provided in this Section 7) adversely affect any Award granted and then outstanding under the Plan without the consent of the Participant; provided further that, notwithstanding any other provision of the Plan or any Award Agreement, without the approval of the shareholders of the Company, no amendment, alteration, suspension, discontinuation, or termination of the Plan shall be made that would: (i) increase the total number of Shares available for Awards under the Plan or the maximum number of Shares with respect to which Awards may be made to individual Participants, except as provided in Section 4(b) hereof; (ii) modify the performance criteria pursuant to which Restricted Stock vests; (iii) materially increase the benefits accruing to Participants under the Plan; or (iv) materially modify the requirements as to eligibility for participation in the Plan. (b) Adjustments of Awards Upon Certain Acquisitions --- In the event the Company or any Affiliate shall assume outstanding employee awards or the right or obligation to make future such awards in connection with the acquisition of another business or another corporation or business entity, the Committee may make such adjustments, not inconsistent with the terms of the Plan, in the terms of Awards granted to Participants as it shall deem appropriate in order to achieve reasonable comparability or other equitable relationship between the assumed awards and the Awards granted under the Plan to Participants as so adjusted. (c) Correction of Defects, Omissions, and Inconsistencies --- The Committee may correct any defect, supply any omission, or reconcile any inconsistency in any Award or Award Agreement in the manner and to the extent it shall deem necessary or desirable to carry the Plan into effect. 9 Section 8. General Provisions - - ------------------------------- (a) No Rights to Awards --- No Key Salaried Employee, Participant or other Person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Key Salaried Employees, Participants, or holders or beneficiaries of Awards under the Plan. The terms and conditions of Awards need not be the same with respect to each Participant. (b) Withholding --- No later than the date as of which an amount first becomes includible in the gross income of a Participant for federal income tax purposes with respect to any Award under the Plan, the Participant shall pay to the Company, or make arrangements satisfactory to the Company 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. Unless otherwise determined by the Committee, withholding obligations arising with respect to Awards to Participants under the Plan may be settled with Shares (other than Restricted Securities), including Shares that are part of, or are received upon exercise of, the Award that gives rise to the withholding requirement. The obligations of the Company under the Plan shall be conditional on such payment or arrangements, and the Company and any Affiliate shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the Participant. The Committee may establish such procedures as it deems appropriate for the settling of withholding obligations with Shares, including, without limitation, the establishment of such procedures as may be necessary to satisfy the requirements of Rule 16b-3. (c) No Limit on Other Compensation Arrangements --- Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other or additional compensation arrangements, and such arrangements may be either generally applicable or applicable only in specific cases. (d) Rights and Status of Recipients of Awards --- The grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of the Company or any Affiliate. Further, the Company or any Affiliate may at any time dismiss a Participant from employment, free from any liability, or any claim under the Plan. Except for rights accorded under the Plan and under any applicable Award Agreement, Participants shall have no rights as holders of Shares as a result of the granting of Awards hereunder. (e) Unfunded Status of the Plan --- Unless otherwise determined by the Committee, the Plan shall be unfunded and shall not create (or be construed to create) a trust or a separate fund or funds. The Plan shall not establish any fiduciary relationship between the Company and any Participant or other Person. To the extent any Person holds any right by virtue of a grant under the Plan, such right (unless otherwise determined by the Committee) shall be no greater than the right of an unsecured general creditor of the Company. (f) Governing Law --- The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the internal laws of the State of 10 Wisconsin and applicable federal law. (g) Severability --- If any provision of the Plan or any Award Agreement or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction, or as to any Person or Award, or would disqualify the Plan, any Award Agreement or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan, any Award Agreement or the Award, such provision shall be stricken as to such jurisdiction, Person, or Award, and the remainder of the Plan, any such Award Agreement and any such Award shall remain in full force and effect. (h) No Fractional Shares --- No fractional Shares or other securities shall be issued or delivered pursuant to the Plan, any Award Agreement or any Award, and the Committee shall determine (except as otherwise provided in the Plan) whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional Shares or other securities, or whether such fractional Shares or other securities or any rights thereto shall be canceled, terminated, or otherwise eliminated. (i) Headings --- Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. Section 9. Effective Date of the Plan - - -------------------------------------- The Plan shall be effective as of March 1, 1994, subject, however, to the approval of the Plan by the shareholders of the Company at the next annual meeting of shareholders, or any adjournment thereof, within twelve months following the date of adoption of the Plan by the Board of Directors of the Company. Section 10. Term of the Plan - - ----------------------------- No Award shall be granted under the Plan after March 1, 2004. However, unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award theretofore granted may extend beyond such date, and, to the extent set forth in the Plan, the authority of the Committee to amend, alter, adjust, suspend, discontinue, or terminate any such Award, or to waive any conditions or restrictions with respect to any such Award, and the authority of the Board of Directors of the Company to amend the Plan, shall extend beyond such date. -----END PRIVACY-ENHANCED MESSAGE-----