-----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, EExJv4WP9e11p7DbtNoQaQkgk7+3WugyEtzAS6uZjqx4q3D4/pDxk86Kpirxl2Vl OshUK99ntR2ws18HNR46nQ== 0000314890-97-000004.txt : 19970502 0000314890-97-000004.hdr.sgml : 19970502 ACCESSION NUMBER: 0000314890-97-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970501 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WICOR INC CENTRAL INDEX KEY: 0000314890 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS DISTRIBUTION [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: 97592964 BUSINESS ADDRESS: STREET 1: 626 E WISCONSIN AVE CITY: MILWAUKEE STATE: WI ZIP: 53202 BUSINESS PHONE: 4142917026 MAIL ADDRESS: STREET 1: 626 E WISCONSIN AVE CITY: MILWAUKEE STATE: WI ZIP: 53202 10-Q 1 WICOR 10-Q FOR THE PERIOD ENDED MARCH 31, 1997 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 March 31, 1997 or / / TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-7951 WICOR, Inc. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Wisconsin 39-1346701 ------------------------------- -------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 626 East Wisconsin Avenue, Post Office 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 April 24, 1997 - -------------------------- ----------------------------- Common Stock, $1 Par Value 18,414,309 2 INTRODUCTION WICOR, Inc. ("WICOR" or the "Company") is a diversified holding company with two principal business groups: an energy group responsible for natural gas distribution and related services, and a manufacturing group responsible for the manufacture of pumps and processing equipment used to pump, control, transfer, hold and filter water and other fluids. The Company engages in natural gas distribution through its subsidiary, Wisconsin Gas Company ("Wisconsin Gas"), the oldest and largest natural gas distribution utility in Wisconsin. Through several nonutility subsidiaries, the Company also engages in the manufacture and sale of pumps and processing equipment. The Company's manufactured products primarily have water system, pool and spa, agricultural, RV/marine and beverage/food service applications. The Company markets its manufactured products in 100 countries. The Company is incorporated under the laws of the State of Wisconsin and is exempt from registration as a holding company under the Public Utility Holding Company Act of 1935, as amended. CONTENTS PAGE ------ PART I. Financial Information 1 Management's Discussion and Analysis of Interim Financial Statements 2-4 Consolidated Financial Statements of WICOR, Inc. (Unaudited): Consolidated Statements of Operation for the Three Months Ended March 31, 1997 and 1996 5 Consolidated Balance Sheets as of March 31, 1997 and December 31, 1996 6-7 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1997 and 1996 8 Notes to Consolidated Financial Statements 9 PART II. Other Information 10 Signatures 11 3 Part I - Financial Information Financial Statements -------------------- The consolidated statements included herein 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 audited financial statements and the notes thereto included in the WICOR, Inc. Annual Report on Form 10-K for the year ended December 31, 1996. In the opinion of management, the information furnished reflects all adjustments, which in all circumstances were normal and recurring, necessary for a fair presentation of the results of operations for the interim periods. Because of seasonal factors, the results of operations for the interim periods presented are not necessarily 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 first quarter of 1997 decreased by $3.0 million, or 10%, to $27.9 million compared to the same period of the prior year. The decrease is attributable to the energy group earnings which declined by $2.8 million, or 11%. The following factors had a significant effect on the results of operations during the three-month period ended March 31, 1997. Energy - ------ Net income decreased to $23.8 million from $26.6 million, or 11%, for the first quarter of 1997 compared with the first quarter of 1996. The decline is attributable to lower gas margins which were partially offset by decreased depreciation expense. The lower gas margins resulted from decreased firm sales volumes and a $3.0 million voluntary annual rate reduction effective November 1, 1996. 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. The following tables set forth margin and volume data for the Energy Group and utility, respectively, for each of the quarters ended March 31. Three Months Ended March 31, ------------- % (Millions of Dollars) 1997 1996 Change - -------------------------- ------ ------ ------ Energy Revenues $237.0 $219.5 8 Cost of Gas Sold 164.4 137.3 20 ------ ------ Sales Margin 72.6 82.2 (12) Gas Transportation Margin 6.7 3.4 97 ------ ------ Gross Margin 79.3 85.6 (7) ------ ------ Operation and Maintenance 27.7 27.8 - Depreciation and Amortization 7.6 8.3 (8) Interest and Other 3.1 3.3 (6) Taxes, Other Than Income Taxes 2.6 2.6 - ------ ------ Income Before Income Taxes 38.3 43.6 (12) Income Tax Expense 14.5 17.0 (15) ------ ------ Net Income $ 23.8 $ 26.6 (11) ====== ====== 5 Three Months Ended March 31, -------------- % (Millions of Therms) 1997 1996 Change - -------------------- ------ ------ ------ Sales Volumes Firm 361.5 407.5 (11) Interruptible 34.1 77.2 (56) Transportation Volumes 122.8 64.4 91 ------ ------ Total Throughput 518.4 549.1 (6) ====== ====== Degree Days (Normal: 1st Qtr. = 3,438) 3,315 3,630 (9) ====== ====== The decrease in firm sales volumes for the first quarter of 1997 as compared with the 1996 first quarter was caused by warmer weather. The increase in transportation volumes was due mainly to more customers purchasing gas from sources other than Wisconsin Gas and transporting the volumes over the Wisconsin Gas distribution system. The movement to transportation from gas sales had no impact on margin. The weather was 4% warmer than normal during the first three months of 1997 and 9% warmer than the same period in 1996. Operating and maintenance expenses remained relatively flat during the three-month period ended March 31, 1997, compared with the same period of 1996. Depreciation expense for the three months ended March 31, 1997 decreased by $0.7 million, or 8%, compared with the same period of last year. The 1997 decrease was due to the one-time impact of the application of new depreciation rates permitted by the Public Service Commission of Wisconsin in 1996. 6 Manufacturing - ------------- The manufacturing group posted earnings of $4.1 million for the first quarter of 1997 compared to $4.3 million in the first quarter of 1996 Financial data regarding the Manufacturing Group are set forth in the table below. Three Months Ended March 31, ----------------- % 1997 1996 Change -------- -------- ------ (Millions of Dollars) - --------------------- Net Sales $ 105.3 $ 105.8 - Cost of Goods Sold 77.0 75.8 2 -------- -------- Gross Profit 28.3 30.0 (6) Operating Expenses 20.9 22.0 (5) -------- -------- Operating Income 7.4 8.0 (8) Interest and Other 1.1 1.3 (15) -------- -------- Income Before Income Taxes 6.3 6.7 (6) Income Tax Expense 2.2 2.4 (8) -------- -------- Net Income $ 4.1 $ 4.3 (5) ======== ======== Net sales for the first quarter of 1997 remained flat compared to the same period in 1996, reflecting comparable overall sales activity in both domestic and international markets. While sales were level in total, increased sales in water systems, food service, fire fighting and RV/marine were offset by reductions in pool/spa and agricultural markets. Fluctuations in quarterly sales by market were generally the result of economic, weather or timing related shifts in customer demand, and are not considered significant or unusual. Gross profit margins were 26.9% for the 1997 first quarter as compared to 28.4% for the first quarter of 1996. Quarterly operating margins were curbed by several factors, including lower margins related to product mix and manufacturing variances principally related to facility consolidation. Manufacturing operating expenses for the quarter declined by 5% compared to the same period in 1996. The decrease is due to cost reduction programs implemented in 1996, lower selling expenses and currency exchange gains 7 Consolidated Non-Operating Income and Income Taxes - -------------------------------------------------- Interest expense decreased $0.1, or 3%, to $4.4 million for the three- months ended March 31, 1997, compared to the same period of 1996, due primarily to lower interest rates. Income tax expense was $2.7 million lower for the first three months of 1997, compared to the same period last year, reflecting decreased pre-tax income. Liquidity and Capital Resources - ------------------------------- Cash flow from operations for the three months ended March 31, 1997 decreased by $37.7 million, or 51%, from the comparable period in 1996. Due to the seasonal nature of the energy business, accrued revenues, accounts receivable and accounts payable levels are higher in the heating season as compared with the summer months. The cash flow decline is due primarily to increased gas prices which have not yet been collected from customers. Capital expenditures for the three months ended March 31, 1997 of $8.9 million remained flat compared to the same period in 1996. During the third quarter of 1997, the Company plans to refinance the remaining principal balance (approximately $27 million) of the credit facility entered into in connection with the July 1995 acquisition of Hypro Corporation. In addition, the Company has initiated discussions with its commercial banks to extend the term of its existing revolving credit facilities. The Company anticipates additional short-term borrowing during the third and fourth quarters of 1997 to finance working capital, primarily gas in storage and the financing of accounts receivable during the heating season. 8 WICOR, INC. Consolidated Statements of Operation (Unaudited) (Thousands of dollars, Except Per Share Data)
Three Months Ended March 31, ------------------------- 1997 1996 ----------- ----------- Operating Revenues: Energy $ 243,731 $ 222,954 Manufacturing 105,334 105,793 ----------- ----------- 349,065 328,747 ----------- ----------- Operating Costs and Expenses: Cost of gas sold 164,421 137,325 Manufacturing cost of sales 77,044 75,838 Operations and maintenance 48,223 49,467 Depreciation and amortization 7,939 8,667 Taxes, other than income taxes 2,559 2,507 ----------- ----------- 300,186 273,804 ----------- ----------- Operating Income 48,879 54,943 ----------- ----------- Interest Expense (4,438) (4,583) Other Income and (Expenses) 172 30 ----------- ----------- Income Before Income Taxes 44,613 50,390 Income Tax Provision 16,705 19,441 ----------- ----------- Net Income $ 27,908 $ 30,949 =========== =========== Per Share of Common Stock: Net Income $ 1.52 $ 1.69 Cash Dividends $ 0.42 $ 0.41 Average Common Shares Outstanding (Thousands) 18,413 18,298
The accompanying notes are an integral part of these statements. 9 WICOR, INC. Consolidated Balance Sheets
March 31, 1997 December 31, (Unaudited) 1996 ----------- ------------ (Thousands of Dollars) Assets - ------ Current Assets: Cash and cash equivalents $ 11,148 $ 18,784 Accounts receivable, less allowance for doubtful accounts of $18,743 and $14,429, respectively 208,688 150,076 Accrued utility revenues 31,750 59,794 Manufacturing inventories 73,683 72,316 Gas in storage, at weighted average cost 7,959 33,463 Deferred income taxes 21,705 21,706 Prepayments and other 15,405 16,566 ----------- ------------ 370,338 372,705 Property, Plant and Equipment (less accum- ----------- ------------ ulated depreciation of $469,987 and $477,577, respectively) 438,293 441,408 ----------- ------------ Deferred Charges and Other: Regulatory assets 100,413 101,808 Goodwill 60,554 61,366 Prepaid pension costs 38,193 36,869 Systems development costs 21,645 23,052 Other 20,499 20,444 ----------- ------------ 241,304 243,539 ----------- ------------ $1,049,935 $ 1,057,652 =========== ============
The accompanying notes are an integral part of these statements. 10 WICOR, INC. Consolidated Balance Sheets (continued)
March 31, 1997 December 31, (Unaudited) 1996 ------------ ------------ (Thousands of Dollars) Liabilities and Capitalization - ------------------------------ Current Liabilities: Accounts payable $ 74,328 $ 98,951 Refundable gas costs 52,046 31,545 Short-term borrowings 86,183 114,810 Current portion of long-term debt 3,582 4,061 Accrued taxes 18,422 1,260 Accrued payroll and benefits 14,718 17,246 Other 17,610 21,464 ------------ ------------ 266,889 289,337 ------------ ------------ Deferred Credits and Other: Postretirement benefit obligation 66,434 66,391 Regulatory liabilities 59,675 61,749 Deferred income taxes 39,623 39,668 Accrued environmental remediation costs 36,138 36,222 Unamortized investment tax credit 6,899 7,265 Other 16,875 19,399 ------------ ------------ 225,644 230,694 ------------ ------------ Capitalization: Long-term debt 169,780 169,169 Common stock 18,414 18,407 Other paid-in capital 225,304 224,041 Retained earnings 149,951 129,777 Cumulative currency translation adjustment (793) 1,349 Unearned compensation - ESOP and restricted stock (5,254) (5,122) ------------ ------------ 557,402 537,621 ------------ ------------ $ 1,049,935 $ 1,057,652 ============ ============
The accompanying notes are an integral part of these statements. 11 WICOR, INC. Consolidated Statement of Cash Flows (Unaudited) (Thousands of Dollars)
Three Months Ended March 31, -------------------------- 1997 1996 ----------- ----------- Operations: Net income $ 27,908 $ 30,949 Adjustments to reconcile net income to net cash flows: Depreciation and amortization 13,324 13,481 Deferred income taxes (44) 167 Change in: Receivables (30,568) (54,617) Manufacturing inventories (1,367) (3,688) Gas in storage 25,504 20,362 Other current assets (315) (432) Accounts payable (24,623) 14,325 Refundable gas costs 20,501 41,626 Accrued taxes 18,638 17,407 Accrued payroll and benefits (2,528) (801) Other current liabilities (3,854) (1,373) Other non-current assets and liabilities, net (6,514) (3,689) ----------- ----------- 36,062 73,717 ----------- ----------- Investment Activities: Capital expenditures (8,976) (8,911) Other 68 18 ----------- ----------- (8,908) (8,893) ----------- ----------- Financing Activities: Change in short-term borrowings (25,627) (46,880) Reduction in long-term debt (2,700) (4,042) Issuance of long-term debt - 366 Issuance of common stock 1,270 2,052 Dividends paid on common stock, less amounts reinvested (7,733) (7,502) ----------- ----------- (34,790) (56,006) ----------- ----------- Change in Cash and Cash Equivalents (7,636) 8,818 Cash and Cash Equivalents at Beginning of Period 18,784 20,380 ----------- ----------- Cash and Cash Equivalents at End of Period $ 11,148 $ 29,198 =========== ===========
The accompanying notes are an integral part of these statements. 12 Notes to Consolidated Financial Statements (Unaudited): 1) At March 31, 1997 WICOR had borrowings of $19.1 million and availability of $217.8 million under unsecured lines of credit with several banks. The Company reclassified $6.0 million of commercial paper as long-term debt as of March 31, 1997. A total of $36.7 million of commercial paper, classified as short-term debt, was outstanding as of March 31, 1997 at a weighted average interest rate of 6.2%. 2) For purposes of the Consolidated Statements of Cash Flows, income taxes paid, net of refunds, and interest paid (excluding capitalized interest) were as follows: For the Three Months Ended March 31, ---------------------- 1997 1996 ---------- ---------- (Thousands of Dollars) Income taxes paid $ 1,062 $ 5,204 Interest paid $ 3,920 $ 3,555 13 Part II - Other Information Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 27 Financial data schedule (EDGAR version only). (b) Reports on Form 8-K - There were no reports on Form 8-K filed by the Company during the first quarter of 1997. 14 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: April 29, 1997 By: /s/ Joseph P. Wenzler ---------------------- Joseph P. Wenzler Vice President, Treasurer and Chief Financial Office 15 WICOR, Inc. Exhibit Index - FORM 10-Q Exhibit No. Exhibit - ---------- ----------------------------------------------- 27 Financial data schedule (EDGAR version only EX-27 2 FINANCIAL DATA SCHEDULE
UT This schedule contains summary financial information extracted from the WICOR, Inc. FORM 10-Q for the three months ended March 31, 1997 and is qualified in its entirety by reference to such financial statements and the related footnotes. 1,000 3-MOS DEC-31-1997 MAR-31-1997 PER-BOOK 375,280 63,013 370,338 241,304 0 1,049,935 18,414 225,304 143,904 387,622 0 0 169,780 27,000 150,000 36,658 3,582 0 0 0 425,293 1,049,935 349,065 16,705 300,186 316,891 32,174 172 32,346 4,438 27,908 0 27,908 7,733 270 36,062 1.52 1.52
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