-----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, RO8tdDhLzFECHRdeJPDNoHuJOXg78msPDEZ7k/1r4gODQsUCaGAxnvrKwGCRLUWY hxRqPOEpUmg3sVIv2PAYxQ== 0000314890-98-000006.txt : 19981104 0000314890-98-000006.hdr.sgml : 19981104 ACCESSION NUMBER: 0000314890-98-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981103 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: SEC FILE NUMBER: 001-07951 FILM NUMBER: 98736524 BUSINESS ADDRESS: STREET 1: 626 E WISCONSIN AVE STREET 2: PO BOX 334 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 SEPTEMBER 30, 1998 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, 1998 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 Milwaukee, Wisconsin 53202 --------------------------------------- ---------- (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 October 16, 1998 - -------------------------- ------------------------------- Common Stock, $1 Par Value 37,344,914 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 about 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 2-7 Consolidated Financial Statements of WICOR, Inc. (Unaudited): ------------------------------------------------------------- Consolidated Statements of Operation for the Three and Nine Months Ended September 30, 1998 and 1997 8 Consolidated Balance Sheets as of September 30, 1998 and December 31, 1997 9-10 Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1998 and 1997 11 Notes to Consolidated Financial Statements 12 PART II. Other Information and Exhibits 13 Signatures 14 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, 1997. 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. Forward-Looking Statements - -------------------------- Certain matters discussed in this report are "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified as such because they include words such as the Company "believes," "anticipates," "expects," or words of similar import. Similarly, statements that describe the Company's future plans, objectives or goals also are considered forward-looking. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from current expectations. These factors include but are not limited to the risks and uncertainties listed below. All of these factors are difficult to predict and generally beyond management's control. >> the impact of warmer- or colder-than-normal weather on the energy business >> the impact of cool or wet weather on the pump manufacturing markets >> economic conditions, including the availability of individual discretionary income and changes in interest rates and foreign currency valuations >> changes in natural gas prices and supply availability >> increased competition in deregulated energy markets >> the pace and extent of energy industry deregulation >> regulatory, government and court decisions >> increases in costs to clean up environmental contamination >> the Company's ability to increase prices >> market demand for the Company's products and services >> unanticipated expenses or outcomes associated with year 2000 date conversion 4 Management's Discussion and Analysis of Interim Financial Statements of WICOR, Inc. Results of Operations - --------------------- The consolidated net loss for the third quarter of 1998 was $1.2 million or $0.9 million lower than in the comparable period of the prior year. The Company's energy business typically incurs a loss in the third quarter due to the seasonal nature of the gas distribution utility business. Continued strength in the manufacturing operations enabled the Company to post its smallest third quarter loss since it was formed in 1980. Consolidated net earnings for the nine months ended September 30, 1998, decreased by $2.4 million, or 7%, to $29.8 million compared to the same period of last year. The following factors had a significant effect on the results of operations during the three- and nine-month periods ended September 30, 1998. Energy - ------ The net loss for the Energy Group in the third quarter of 1998 was slightly greater than the net loss for the 1997 third quarter. Net earnings for the nine months ended September 30, 1998 decreased by $6.6 million, or 37%, compared to the same period of last year. The decline in 1998 year-to-date net earnings resulted from decreased gas margins which were partially offset by lower operating and maintenance expenses. The lower gas margins were driven by warmer weather during the heating season (18% warmer than last year on a year to date basis). This decrease was partially offset by reduced operating and maintenance costs due to lower labor and benefits expense, a gain recorded earlier in the year relating to a weather insurance agreement, impact of the Gas Cost Incentive Mechanism (GCIM) and a gain realized on the sale of non-utility land. Revenues, margins and volumes are summarized below. Margin, defined as revenues less cost of gas sold, is a better performance indicator than revenues because the mix of utility 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 for Wisconsin Gas under a gas adjustment clause. The following tables set forth results of operation data for the Energy Group and volume data for Wisconsin Gas, for each of the periods shown. 5 [CAPTION] Three Nine Months Ended Months Ended September 30, September 30, ----------------- % ----------------- % (Millions of Dollars) 1998 1997 Change 1998 1997 Change - --------------------- -------- -------- ------ -------- -------- ------ Energy Revenues $ 59.0 $ 66.6 (11) $ 324.4 $ 404.5 (20) Cost of Gas Sold 39.7 46.1 (14) 211.2 278.6 (24) -------- -------- -------- -------- Sales Margin 19.3 20.5 (6) 113.2 125.9 (10) Gas Transportation Margin 4.3 4.4 (2) 16.2 16.2 - -------- -------- -------- -------- Gross Margin 23.6 24.9 (5) 129.4 142.1 (9) -------- -------- -------- -------- Operation and Maintenance 21.8 22.4 (3) 73.7 75.0 (2) Depreciation/Amortization 8.4 8.0 5 25.2 23.5 7 Taxes, Other Than Income Tax 2.2 2.3 (4) 7.0 7.0 - -------- -------- -------- -------- 32.4 32.7 (1) 105.9 105.5 - -------- -------- -------- -------- Operating (Loss) Income (8.8) (7.8) (13) 23.5 36.6 (36) -------- -------- -------- -------- Interest Expense (3.0) (2.9) (3) (9.1) (8.8) (3) Other Income/(Expenses), net 1.1 0.3 267 3.0 0.7 329 -------- -------- -------- -------- Pretax (Loss) Earnings (10.7) (10.4) (3) 17.4 28.5 (39) Income Tax (Benefit) Expense (4.0) (4.0) - 6.4 10.9 (41) -------- -------- -------- -------- Net (Loss) Earnings $ (6.7) $ (6.6) (2) $ 11.0 $ 17.6 (37) ======== ======== ======== ======== (Millions of Therms) - -------------------- Utility Sales Volumes - --------------------- Firm 44.8 53.0 (15) 441.9 541.8 (18) Interruptible 6.1 10.7 (43) 28.1 58.6 (52) Transportation Volume 92.4 88.1 5 329.3 309.2 6 -------- -------- -------- -------- Total Throughput 143.3 151.8 (6) 799.3 909.6 (12) ======== ======== ======== ======== Degree Days - ----------- Actual 47 162 (71) 3,857 4,692 (18) ======== ======== ======== ======== 20 year average 155 4,539 ======== ========
6 The decrease in firm sales volumes for the nine months ended September 30, 1998 was caused principally by warmer weather, lower average use per customer and firm customers switching from sales to transportation service. Transportation volumes increased mainly because more customers purchased gas from sources other than Wisconsin Gas and transported the volumes over the Wisconsin Gas distribution system. Historically, the movement to transportation from gas sales had no impact on margin. A slightly lower margin rate was put into effect on November 1, 1997, for transportation-only customers. The future impact of this margin adjustment on total Company earnings is expected to be immaterial. The weather was 15% warmer than the 20-year average during the first nine months of 1998 and 18% warmer than the same period in 1997. Operations and maintenance expenses decreased $0.6 million, or 3%, and $1.3 million, or 2%, for the three and nine months ended September 30, 1998, respectively, compared with the same periods of last year. The decrease for the quarter and year-to-date periods was due to lower labor and benefit expenses at Wisconsin Gas. This decrease was partially offset by costs associated with the increased operating costs incurred by FieldTech, Inc., a wholly owned subsidiary of WICOR. Depreciation expense for the nine months ended September 30, 1998, increased by $1.7 million, or 7%, compared with the same period of 1997. The increase was due to additions to depreciable plant balances. Other income for the 1998 third quarter increased due to a $0.8 million pretax gain associated with the sale of non-utility land. For the nine months ending September 30, 1998, other income was positively impacted by the land sale and a gain associated with a weather insurance agreement. Manufacturing - ------------- Manufacturing net earnings for the three and nine months ended September 30, 1998, increased by 22% to $5.5 million and 29% to $18.8 million, respectively, as compared with the same periods in 1997. 7
Three Nine Months Ended Months Ended September 30, September 30, ----------------- % ----------------- % (Millions of Dollars) 1998 1997 Change 1998 1997 Change - --------------------- -------- -------- ------ -------- -------- ------ Net Sales $ 109.4 $ 102.3 7 $ 355.3 $ 323.3 10 Cost of goods sold 78.4 73.5 7 253.3 233.8 8 -------- -------- -------- -------- Gross profit 31.0 28.8 8 102.0 89.7 14 Operating expenses 21.3 20.3 5 67.9 62.3 9 -------- -------- -------- -------- Operating income 9.7 8.5 14 34.1 27.4 24 Interest expense (1.1) (1.1) - (3.6) (4.0) (10) Other Income/(expense), net 0.2 - NA 0.1 - NA -------- -------- -------- -------- Net income before income taxes 8.8 7.4 19 30.6 23.4 31 Income taxes 3.3 2.9 14 11.8 8.8 34 -------- -------- -------- -------- Net earnings $ 5.5 $ 4.5 22 $ 18.8 $ 14.6 29 ======== ======== ======== ========
Domestic sales in the third quarter increased to $79.8 million, or 17%, over the comparable period of 1997. Overall shipments within the water systems, pool/spa, filtration and the food and beverage markets in North America were up from last year's comparable period. The increase was due mainly to growth in customer base and new product introductions. International sales for the third quarter decreased to $29.6 million, or 14%, compared to the third quarter of 1997. The decrease in international sales, due primarily to the impact of foreign currency translation related to the strengthening U.S. dollar and continued volatility in the Asian economy, was partially offset by the introduction of new products. On a year-to-date basis, international sales decreased by 4% compared to the same period in 1997. For the nine months ended September 30, 1998 and 1997, international sales accounted for 30% and 34%, respectively, of total net sales for the manufacturing group. 8 Gross profit margins for the three and nine months ended September 30, 1998, improved to 28.3% and 28.7%, respectively, as compared with 28.1% and 27.7%, respectively, in the same periods of last year. Improved manufacturing productivity continued to positively impact gross profit during the periods. Operating expenses, as a percentage of sales, for the nine months ended September 30, 1998, decreased slightly compared to the same period in 1997. Operating expenses in total increased by $5.6 million, or 9%, due in part to the impact of higher support spending for product line acquisitions, introductions of new products and customer development. Interest Expense, Non-Operating Income and Expense and Income Taxes - ------------------------------------------------------------------- Interest expense for the Company on a consolidated basis increased slightly for the three and nine months ended September 30, 1998, compared to the similar periods of 1997. The increase reflects slightly higher borrowing levels to fund working capital requirements. Other income, net of expenses, increased by $2.8 million for the nine months ended September 30, 1998, compared to the same period of 1997. See the discussion within the Energy section for further information on this matter. Income tax expense was $1.4 million lower for the first nine months of 1998 compared to the same period last year, reflecting lower pre-tax income. Financial Condition - ------------------- Cash flow from operations for the nine months ended September 30, 1998, increased by $32.8 million, or 37%, from the comparable period in 1997. The cash flow improvement was due primarily to lower gas prices. Due to the seasonal nature of the energy business, accrued revenues, accounts receivable and accounts payable amounts are higher in the heating season. Cash flow from operations exceeded capital expenditures and dividend requirements for the first nine months in both 1998 and 1997. Capital expenditures decreased by $0.9 million, or 3%, to $33.9 million for the nine months ended September 30, 1998, compared to the same period in 1997. Cash flow from operations is expected to be sufficient to fund remaining capital expenditures for 1998. In November, 1998, $40 million, 7-1/2% notes will mature. The Company will use commercial paper to retire the notes and will evaluate long-term financing options for the notes. 9 Additional short-term borrowing will be needed during the fourth quarter of 1998 to finance working capital primarily related to gas purchased for injection into storage and accounts receivable. The Company has sufficient borrowing capacity under commercial paper programs or existing lines of credit to satisfy these working capital needs. On July 28, 1998, the Board of Directors of the Company authorized an increase in the Company's dividend per share on common stock to $0.22 per quarter ($0.88 per share on an annualized basis). The first quarterly payment at the new amount was made August 31, 1998, to shareholders of record on August 10, 1998. Regulatory Matters - ------------------ The approved by the Public Service Commission of Wisconsin (PSCW) in October 1997, became effective on November 1, 1997, for each of the three years ending October 31, 1998, 1999 and 2000. Under the GCIM, Wisconsin Gas's gas commodity and capacity costs are compared to monthly benchmarks. If, at the end of each GCIM year, such costs deviate by more than 1-1/2% from the benchmark cost of gas, the utility shares such excess or reduced costs on a 50-50 basis with customers. The sharing mechanism applies only to costs between 1-1/2% to 4% above or below the benchmark. The GCIM provides an opportunity for Wisconsin Gas's earnings to increase or decrease as a result of gas and capacity acquisition activities. Reduced gas costs under the GCIM have been shared between the Company and its customers. Wisconsin Gas increased its rates within the framework of the Productivity-based Alternative Ratemaking Mechanism (PARM) by $7.5 million, on an annualized basis effective August 1, 1998. With this increase, Wisconsin Gas's rates recover $1.5 million per year less than the maximum amount allowed by the PSCW's November 1994 rate order. The Company has the ability to raise or lower margin rates within a specified range on a quarterly basis. The rate increase is expected to offset increased operating costs. 10 Accounting Standards - -------------------- In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards 131, "Disclosure About Segments of an Enterprise and Related Information" ("SFAS 131"). This statement establishes additional standards for segment reporting in the financial statements and is effective for fiscal years beginning after December 15, 1997. The Company believes the segment information required to be disclosed under SFAS 131 will be more comprehensive than previously provided, including expanded disclosure of income statement and balance sheet items for each of its reportable segments under SFAS 131. However, the Company has not yet completed its analysis of which operating segments will be subject to this reporting requirement. Year 2000 Date Conversion - ------------------------- Issues relating to Year 2000 conversion are the result of computer software programs being written using two digits rather than four to define the applicable year. Any of the Company's software programs, computer hardware or equipment that have date sensitive software or embedded chips may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a system failure or miscalculations causing disruptions of operations, including, among other things, a temporary inability to process transactions, send invoices, distribute natural gas, manufacture products or engage in other normal business activities. The Company has developed a formal plan to ensure that all of its significant date-sensitive computer software and hardware systems (Information Technology) and other equipment utilized in its various activities (Operating Equipment) will be Year 2000 compliant and operational on a timely basis. The plan addresses all of the Company's locations throughout the world, and includes a review of computer applications that connect elements of the Company's business directly to its customers and suppliers. The plan also includes an assessment process to determine if the Company's significant customers and suppliers will be Year 2000 compliant. The Company's plan to resolve issues relating to Year 2000 conversion includes four major phases - assessment, remediation, testing, and implementation. To assist the Company in reaching Year 2000 compliance, the Company has retained third party consultants to assist with the project. The Company has substantially completed the assessment phase of its plan for all of its significant Information Technology and Operating Equipment that it believes could be affected by the Year 2000 conversion. Based upon its assessment, the Company concluded that it would be necessary to reprogram and/or replace certain of its Information Technology. The Company also determined that certain of its Operating Equipment would also require modifications to ensure it remains operational. 11 For its Information Technology applications, the Company believes it is approximately 54% compliant on all of its significant systems, and estimates that it will complete software reprogramming and/or replacement in the second quarter of 1999. The Company believes that the Operating Equipment is approximately 36% compliant, and the Company is targeting completion during the second quarter of 1999. With respect to operations that involve third parties, the Company has made inquiries of its significant customers and suppliers and, at the present time and based on such inquires, is not aware of Year 2000 issues facing these third parties that would materially impact the Company's operations. However, the Company has no means of ensuring that these customers and suppliers (and, in turn, their customers and suppliers) will be Year 2000 compliant in a timely manner. The inability of these parties to successfully resolve their Year 2000 issues could have a material adverse effect on the Company. Despite the efforts that the Company has undertaken, there can be no assurances that every Year 2000 related issue will be identified and addressed before January 1, 2000. An unexpected failure as a result of a Year 2000 compliance issue could result in an interruption in certain normal business activities or operations. For that reason, the Company is currently developing contingency plans to address alternatives in the event certain Year 2000 compliance failures occur. Through September 30, 1998, the Company had spent approximately $3.5 million for Year 2000 remediation. The amount of additional development and remediation costs necessary for the Company to prepare for Year 2000 is estimated to be approximately $1.3 million and is expected to be funded through operating cash flow. The estimated costs of, and timetable for, becoming Year 2000 compliant constitute "forward looking statements" as defined in the Private Securities Litigation Reform Act of 1995 (see Part 1 of this Form 10-Q). 12 WICOR, INC. Consolidated Statements of Operation (Unaudited) (Amounts in Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended September 30, September 30, --------------------- --------------------- 1998 1997 1998 1997 ---------- ---------- ---------- ---------- Operating Revenues: Energy $ 63,351 $ 71,045 $ 340,615 $ 420,699 Manufacturing 109,395 102,297 355,337 323,313 ---------- ---------- ---------- ---------- 172,746 173,342 695,952 744,012 ---------- ---------- ---------- ---------- Operating Costs and Expenses: Cost of gas sold 39,728 46,182 211,226 278,596 Manufacturing cost of sales 78,443 73,528 253,261 233,615 Operations and maintenance 42,823 42,336 140,593 136,275 Depreciation and amortization 8,758 8,376 26,162 24,515 Taxes, other than income taxes 2,197 2,308 7,024 7,093 ---------- ---------- ---------- ---------- 171,949 172,730 638,266 680,094 ---------- ---------- ---------- ---------- Operating Income 797 612 57,686 63,918 ---------- ---------- ---------- ---------- Interest Expense (4,049) (3,925) (12,634) (12,300) Other Income and (Expenses) 1,300 172 2,966 184 ---------- ---------- ---------- ---------- (Loss)/Earnings Before Income Taxes (1,952) (3,141) 48,018 51,802 Income Tax (Benefit)/Provision (741) (1,070) 18,242 19,650 ---------- ---------- ---------- ---------- Net (Loss)/Earnings $ (1,211) $ (2,071) $ 29,776 $ 32,152 ========== ========== ========== ========== Per Share of Common Stock: Basic earnings $ (0.03) $ (0.06) $ 0.80 $ 0.87 Diluted earnings $ (0.03) $ (0.06) $ 0.79 $ 0.87 Cash Dividends paid $ 0.220 $ 0.215 $ 0.650 $ 0.635 Average shares outstanding 37,335 36,940 37,297 36,870 Average diluted shares outstanding 37,335 36,940 37,602 37,130
The accompanying notes are an integral part of these statements. 13 WICOR, INC. Consolidated Balance Sheets
September 30, 1998 December 31, (Unaudited) 1997 Assets ----------- ------------ - ------ (Thousands of Dollars) Current Assets: Cash and cash equivalents $ 6,347 $ 11,810 Accounts receivable, less allowance for doubtful accounts of $14,286 and $15,364, respectively 112,012 164,243 Accrued utility revenues 8,119 44,842 Manufacturing inventories 82,169 83,431 Gas in storage, at weighted average cost 45,327 41,887 Deferred income taxes 21,491 21,531 Prepayments and other 15,179 16,924 ----------- ------------ 290,644 384,668 Property, Plant and Equipment (less accum- ----------- ------------ ulated depreciation of $525,117 and $497,239, respectively) 442,577 445,894 ----------- ------------ Deferred Charges and Other: Goodwill 64,610 65,953 Regulatory assets 61,668 53,910 Prepaid pension costs 48,298 42,753 Systems development costs 13,976 17,424 Other 20,867 20,730 ----------- ------------ 209,419 200,770 ----------- ------------ $ 942,640 $ 1,031,332 =========== ============
The accompanying notes are an integral part of these statements. 14 WICOR, INC. Consolidated Balance Sheets (continued)
September 30, 1998 December 31, (Unaudited) 1997 Liabilities and Capitalization ------------ ------------ - ------------------------------ (Thousands of Dollars) Current Liabilities: Short-term borrowings $ 58,205 $ 118,900 Accounts payable 66,275 75,034 Current portion of long-term debt 43,608 43,926 Refundable gas costs 15,930 24,776 Accrued payroll and benefits 20,604 17,573 Accrued taxes 7,649 9,684 Other 20,942 19,999 ------------ ------------ 233,213 309,892 ------------ ------------ Deferred Credits and Other: Postretirement benefit obligation 61,265 64,323 Regulatory liabilities 33,648 36,533 Deferred income taxes 44,587 43,975 Accrued environmental remediation costs 9,277 12,084 Unamortized investment tax credit 6,584 6,808 Other 19,582 18,987 ------------ ------------ 174,943 182,710 ------------ ------------ Capitalization: Long-term debt 139,402 149,110 Common stock 37,345 37,202 Other paid-in capital 216,113 214,101 Retained earnings 153,430 147,903 Accumulated other comprehensive income (7,850) (5,377) Unearned compensation - ESOP and restricted stock (3,956) (4,209) ------------ ------------ 534,484 538,730 ------------ ------------ $ 942,640 $ 1,031,332 ============ ============
The accompanying notes are an integral part of these statements. 15 WICOR, INC. Consolidated Statement of Cash Flows (Unaudited)
Nine Months Ended September 30, ---------------------- 1998 1997 (Thousands of Dollars) ---------- ---------- Operations: Net earnings $ 29,776 $ 32,152 Adjustments to reconcile net earnings to net cash flows: Depreciation and amortization 41,231 40,171 Deferred income taxes 650 264 Change in: Receivables 78,954 76,605 Manufacturing inventories 1,261 (3,492) Gas in storage (3,440) (17,090) Other current assets (571) 649 Accounts payable (8,759) (25,508) Refundable gas costs (8,845) (12,350) Accrued taxes 282 6,975 Other current liabilities 3,976 2,418 Other non-current assets and liabilities, net (14,086) (13,125) ---------- ---------- 120,429 87,669 ---------- ---------- Investment Activities: Capital expenditures (33,896) (34,810) Acquisition of business assets - (2,065) Other 326 275 ---------- ---------- (33,570) (36,600) ---------- ---------- Financing Activities: Change in short-term borrowings (60,695) (58,293) Reduction in long-term debt (12,368) (9,594) Issuance of long-term debt 2,828 27,000 Issuance of common stock 2,155 2,389 Dividends paid on common stock, less (24,242) (23,403) ---------- ---------- (92,322) (61,901) ---------- ---------- Change in Cash and Cash Equivalents (5,463) (10,832) Cash and Cash Equivalents at Beginning of Period 11,810 18,784 ---------- ---------- Cash and Cash Equivalents at End of Period $ 6,347 $ 7,952 ========== ==========
The accompanying notes are an integral part of these statements. 16 Notes to Consolidated Financial Statements (Unaudited): - ------------------------------------------------------- 1) The Company and its subsidiaries maintain lines of credit worldwide. At September 30, 1998, the Company had borrowings of $14.3 million and availability of $233.2 million under unsecured lines of credit with several banks. The Company has classified $17.6 million of commercial paper as long-term debt as of September 30, 1998. A total of $43.9 million of commercial paper, classified as short-term debt, was outstanding as of September 30, 1998 at a weighted average interest rate of 5.5%. 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 Nine Months Ended September 30, ---------------------- 1998 1997 ---------- ---------- (Thousands of Dollars) Income taxes paid $ 20,355 $ 14,556 Interest paid $ 11,175 $ 12,008 3) Total comprehensive income for the nine months ended September 30, 1998 and 1997 is as follows: 1998 1997 ---------- ---------- (Thousands of Dollars) Net earnings $ 29,776 $ 32,152 Other comprehensive income Currency translation adjustments (2,473) (3,697) ---------- ---------- Total comprehensive income $ 27,303 $ 28,455 ========== ========== 17 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 third quarter of 1998 18 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: October 30, 1998 By: /s/ Joseph P. Wenzler ------------------------- Joseph P. Wenzler Senior Vice President and Chief Financial Officer 19 WICOR, INC. EXHIBIT INDEX ------------- EXHIBIT NUMBER DESCRIPTION - -------------- ------------------------------------- 27 Financial Data Schedule EX-27 2 EXHIBIT 27
UT This schedule contains summary financial information extracted from the WICOR, Inc. FORM 10-Q for the nine months ended September 30, 1998 and is qualified in its entirety by reference to such financial statements and the related footnotes. 1,000 9-MOS DEC-31-1998 SEP-30-1998 PER-BOOK 377,897 64,680 290,644 209,419 0 942,640 37,345 216,113 153,430 406,888 0 0 149,042 0 110,000 43,946 43,608 0 0 0 299,156 942,640 695,952 18,242 638,266 656,508 39,444 2,966 42,410 12,634 29,776 0 29,776 24,242 698 120,429 0.80 0.79
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