1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-7951
Exact name of registrant as specified in its charter WICOR,Inc.
Wisconsin 39-1346701
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
626 East Wisconsin Avenue
P.O. Box 334
Milwaukee, Wisconsin 53201
---------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code 414-291-7026
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $1 par value New York Stock Exchange
Associated Common Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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. X Yes No.
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
Aggregate market value of the voting stock held by non-
affiliates of the registrant: $604,073,514 at February 29, 1996.
Number of shares outstanding of each of the registrant's
classes of common stock, as of February 29, 1996:
Common Stock, $1 par value 18,305,258 shares
Documents Incorporated by Reference
WICOR, Inc. proxy statement dated March 12, 1996 (Part III)
WICOR, Inc. 1995 Annual Report to Shareholders (Parts I and II)
2
TABLE OF CONTENTS
PAGE
PART I 1
Item 1. Business 1
(a) General Development of Business 1
(b) Financial Information about Industry Segments 1
(c) Narrative Description of Business 1
1. Energy 1
A. General 1
B. Gas Markets and Competition 2
C. Gas Supply,Pipe Capacity and Storage 3
(1) General 3
(2) Pipeline Capacity and Storage 3
(3) Term Gas Supply 4
(4) Spot Market Gas Supply 4
D. Wisconsin Regulatory Matters 4
(1) Rate Matters 4
(2) Transition Cost Recovery Policy 5
(3) Gas Cost Recovery Mechanism 5
(4) Service Area Expansion 5
(5) Changing Regulatory Environment 5
E. Employees 5
2. Manufacturing of Pumps and Fluid
Processing and Filtration Equipment 6
A. General 6
B. U.S. Operations 6
C. International Operations 6
D. Raw Materials and Patents 7
E. Employees 7
Item 2. Properties 7
(a) Capital Expenditures 7
(b) Energy............. 7
(c) Manufacturing of Pumps, Fluid Processing
and Filtration Equipment 7
Item 3. Legal Proceedings 8
Item 4. Submission of Matters to a Vote of
Security Holders 9
Executive Officers of the Registrant 9
PART II 10
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters 10
Item 6. Selected Financial Data 11
Item 7. Management's Discussion and Analysis
of Results of Operations and
Financial Condition 11
3
TABLE OF CONTENTS (continued)
PAGE
Item 8. Financial Statements and Supplementary Data 11
Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure 11
PART III 11
Item 10. Directors and Executive Officers
of the Registrant 11
Item 11. Executive Compensation 11
Item 12. Security Ownership of Certain
Beneficial Owners and Management 12
Item 13. Certain Relationships and Related
Transactions 12
PART IV 12
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K 12
(a) Documents Filed as Part of the Report 12
1. All Financial Statements and Financial
Statement Schedules 12
2. Financial Statement Schedules 12
3. Exhibits 12
(b) Reports on Form 8-K 15
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PART I
Item 1. BUSINESS
(a) General Development of Business
WICOR, Inc. (the "Company" or "WICOR") is a diversified
holding company with two principal business groups: energy and
manufacturing, with the following subsidiaries engaged in the
indicated businesses. Wisconsin Gas Company ("Wisconsin Gas")
engages in retail distribution of natural gas. As discussed
below, WICOR Energy Services Company ("WES") is a new subsidiary
formed by WICOR to sell energy supplies and energy-related
services. Sta-Rite Industries, Inc. ("Sta-Rite"), SHURflo Pump
Manufacturing Co. ("SHURflo") and Hypro Corporation ("Hypro")
are manufacturers of pumps and fluid processing and filtration
equipment. The Company is a Wisconsin corporation and maintains
its principal executive offices in Milwaukee, Wisconsin.
The Company was incorporated in 1980 at which time it
acquired all the outstanding common stock of Wisconsin Gas
through a merger. The Company acquired all of the outstanding
common stock of Sta-Rite and Shurflo through mergers in 1982 and
1993, respectively.
In March, 1995, the Company formed WICOR Energy Services
Company, as a wholly-owned subsidiary. WES, which does business
as WICOR Gas Marketing, is in the business of selling a variety
of energy supply-related services, including natural gas
purchasing, storage, and energy and risk management.
In July 1995, the Company acquired all of the outstanding
stock of Hypro Corporation through a cash purchase. Hypro is a
manufacturer of pumps and fluid-handling equipment for the
agricultural, high-pressure cleaning, marine, industrial and
firefighting markets.
On January 31, 1996, the Company acquired an 80% ownership
interest in Hydro-Flow Filtration Systems, Inc. ("Hydro-Flow").
Hydro-Flow is a California-based manufacturer of disposable in-
line and cartridge filtration devices for use in water treatment
applications.
At December 31, 1995, the Company (including subsidiaries)
had 3,359 full-time equivalent employees.
(b) Financial Information About Industry Segments
Reference is made to the section entitled "Financial
Review-General Overview" set forth in the Company's 1995 Annual
Report to Shareholders. Such section is included in Exhibit 13
hereto and is hereby incorporated herein by reference.
5
(c) Narrative Description of Business
1. ENERGY
A. General
Wisconsin Gas is the largest natural gas distribution
public utility in Wisconsin. At December 31, 1995, Wisconsin
Gas distributed gas to approximately 505,000 residential,
commercial and industrial customers in 503 communities
throughout Wisconsin having an estimated population of nearly
2,000,000 based on the State of Wisconsin's estimates for 1995.
Wisconsin Gas is subject to the jurisdiction of the Public
Service Commission of Wisconsin ("PSCW") as to various phases of
its operations, including rates, service and issuance of
securities. See "Wisconsin Regulatory Matters."
WES is in the start-up phase of its business, and
accordingly, its results are not material to the Company's
financial position or results of operations.
B. Gas Markets and Competition
Wisconsin Gas' business is highly seasonal, particularly as
to residential and commercial sales for space heating purposes,
with a substantial portion of its sales occurring in the winter
heating season. Competition in varying degrees exists between
natural gas and other forms of energy available to consumers.
Most of Wisconsin Gas' large commercial and industrial customers
are dual-fuel customers that are equipped to switch between
natural gas and alternate fuels. Wisconsin Gas offers
transportation services for these customers to enable them to
reduce their energy costs and use gas rather than other fuels.
Under gas transportation agreements, customers typically seek to
purchase lower-priced spot market gas directly from producers or
other sellers and arrange with pipelines and Wisconsin Gas to
have the gas transported to their facilities. Wisconsin Gas also
offers gas sales services that are priced to compete with these
transportation services. Wisconsin Gas earns the same margin
(difference between revenue and cost of gas), whether it sells
gas to customers or transports customer-owned gas.
6
The following table sets forth the volumes of natural gas
delivered by Wisconsin Gas to its customers.
Year Ended
----------------------------------
December 31, December 31,
---------------- ----------------
000's of 000's of
Therms * % Therms * *
Customer Class --------- ----- --------- -----
Sales
Residential 494,250 38.0 463,690 38.8
Commercial 211,570 16.3 185,980 15.5
Large Volume Commercial
and Industrial Firm 134,960 10.4 145,440 12.2
Commercial and Industrial
Interruptible 313,530 24.1 282,170 23.6
--------- ----- --------- -----
Total Sales 1,154,310 88.8 1,077,280 90.1
Transportation
- --------------
Transported 145,490 11.2 119,080 9.9
--------- ----- --------- -----
Total Gas Throughput 1,299,800 100.0 1,196,360 100.0
========= ===== ========= =====
*One therm equals 100,000 BTU's.
The volumes shown as transported represent customer-owned
gas that was delivered by Wisconsin Gas to its customers. The
remaining volumes represent quantities sold and delivered to
customers by Wisconsin Gas.
Wisconsin Gas secures approximately 98% of all new
residential heating, 88% of existing residential and commercial
retrofit and 70% of all new commercial construction in its
service territory.
The PSCW has instituted a proceeding to consider how its
regulation of gas distribution utilities should change to
reflect the changing competitive environment in the gas
industry. See "Wisconsin Regulatory Matters". In 1995,
Wisconsin Gas added nearly 10,000 customers and now serves more
than one-half million customers. See "Wisconsin Regulatory
Matters - Service Area Expansion".
Up to 25% of Wisconsin Gas' Milwaukee area annual market
requirements can be supplied through the interstate pipelines of
either ANR Pipeline Company ("ANR") or Northern Natural Gas
Company ("NNG"). This capability enhances competition between
ANR and NNG for services to Wisconsin Gas and its customers, and
Wisconsin Gas believes that such competition provides overall
lower gas costs to all customers than otherwise would exist.
7
Wisconsin Gas' future ability to maintain its present share
of the industrial dual-fuel market (the market that has
installed capability to use gas or other fuels) depends upon
Wisconsin Gas' success in obtaining long-term and short-term
supplies of natural gas at marketable prices and its success in
arranging or facilitating transportation service for those
customers that desire to buy their own gas supplies. Although
the dual-fuel market comprises approximately 35% of Wisconsin
Gas' annual deliveries, it contributes only about 12% of
Wisconsin Gas' margin.
C. Gas Supply, Pipeline Capacity and Storage
(1) General
Prior to the Federal Energy Regulatory Commission's
("FERC") Order No. 636, the interstate pipelines serving
Wisconsin Gas were the primary suppliers of natural gas to
Wisconsin Gas. During the transition period prior to the
implementation of Order No. 636, Wisconsin Gas gradually assumed
responsibility for the acquisition of supply in the production
areas of North America, as well as the management of
transportation and storage capacities to deliver that supply to
its market area. On November 1, 1993, Wisconsin Gas commenced
full operation and responsibility for its supply and capacity
under the requirements of Order No. 636.
One of the provisions of Order No. 636 is capacity release.
Capacity release creates a secondary market for pipeline
capacity and gas supplies. Local distribution companies, such
as Wisconsin Gas, must contract for capacity and supply
sufficient to meet the peak day firm demand of their customers.
Peak or near peak days occur only a few times each year, so
capacity release facilitates higher utilization of capacity
during those times when the capacity is not needed by the
utility. Through pre-arranged agreements and day-to-day
electronic bulletin board postings, interested parties can
purchase that capacity. The proceeds from these transactions
are passed through to ratepayers, thereby helping to offset the
costs associated with holding the capacity. During 1995,
Wisconsin Gas was an active participant in the capacity release
market.
Operating under Order No. 636, Wisconsin Gas Company has
been able to meet its contractual obligations with both its
suppliers and its customers despite periods of severe cold and
unseasonably warm weather, including record cold weather in late
January and early February, 1996.
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(2) Pipeline Capacity and Storage
Interstate pipelines serving Wisconsin originate in three
major gas producing areas of North America: the Oklahoma and
Texas basins, the Gulf of Mexico and western Canada. Wisconsin
Gas has contracted for long-term firm capacity on a relatively
equal basis from each of these areas. This strategy reflects
management's belief that overall supply security is enhanced by
geographic diversification of Wisconsin Gas' supply portfolio
and that Canada represents an important long-term source of
reliable, competitively priced gas.
Because of the seasonal variations in gas usage in
Wisconsin, Wisconsin Gas has also contracted with ANR and NNG
for substantial underground storage capacity, primarily in
Michigan. There are no known underground storage formations in
Wisconsin capable of commercialization. Storage enables
Wisconsin Gas to optimize its overall gas supply and capacity
costs. In summer, gas in excess of market demand is transported
into the storage fields, and in winter, gas is withdrawn from
storage and combined with gas purchased in or near the
production areas ("flowing gas") to meet the increased winter
market demand. As a result, Wisconsin Gas can contract for less
pipeline capacity than would otherwise be necessary, and it can
purchase gas on a more uniform daily basis from suppliers year-
round. Each of these capabilities enables Wisconsin Gas to
reduce its overall costs.
Wisconsin Gas also maintains high deliverability storage in
the production area which is designed to deliver gas when other
supplies cannot be delivered during extremely cold weather.
Wisconsin Gas' firm winter daily transportation and storage
capacity entitlements from pipelines under long-term contracts
are set forth below.
Maximum Daily
(Thousands
Pipeline of Therms*)
---------------- -------------
ANR
Mainline 2,999
Storage 4,879
NNG
Mainline 1,085
Storage 150
Viking
Mainline 72
Peaking Facilities 69
-------------
Total 9,254
=============
*One therm equals 100,000 BTU's.
9
(3) Term Gas Supply
Wisconsin Gas has contracts for firm supplies with terms in
excess of 30 days with approximately 30 gas suppliers for gas
produced in each of the three producing areas discussed above.
The term contracts have varying durations so that only a portion
of Wisconsin Gas' gas supply expires in any year. Wisconsin Gas
believes the volume of gas under contract is sufficient to meet
its forecasted firm peak day demand. The following table sets
forth Wisconsin Gas' winter season maximum daily firm total gas
supply.
Maximum Daily
(Thousands
of Therms*)
--------------
Domestic flowing gas 2,350
Canadian flowing gas 1,482
Storage withdrawals 5,029
--------------
Total 8,861
==============
*One therm equals 100,000 BTU's.
(4) Spot Market Gas Supply
Wisconsin Gas expects to continue to make gas purchases in
the 30-day spot market as price and other circumstances dictate.
Wisconsin Gas has purchased spot market gas since 1985 and has
supply relationships with a number of sellers from whom it
purchases spot gas.
D. Wisconsin Regulatory Matters
(1) Rate Matters
Wisconsin Gas is subject to the jurisdiction of the PSCW as
to various phases of its operations, including rates, customer
service and issuance of securities.
Wisconsin Gas' rates are subject to a three year margin rate
cap (through October 1997) based on the rates in effect in
November 1993, less a $10.4 million reduction implemented when
the margin cap became effective in November, 1994. The PSCW
order also specified margin rate floors for each rate class.
Wisconsin Gas has the ability to raise or lower margin rates
within the specified range on a quarterly basis. The rates at
December 31, 1995 were $4.5 million below the cap because of
annualized rate reductions of $3.0 million and $1.5 million made
by the utility in 1995
10
Wisconsin Gas' rates contain clauses providing for periodic
adjustment, with PSCW approval, to reflect changes in purchased
gas costs including the recovery of transition costs passed
through by pipeline suppliers. See "Wisconsin Regulatory
Matters - Transition Cost Recovery Policy" and "Wisconsin
Regulatory Matters - Gas Cost Recovery Mechanism".
(2) Transition Cost Recovery Policy
Under Order No. 636, interstate pipelines are permitted to
recover certain costs incurred in the transition from the
bundled sales service to the unbundled Order No. 636 regime.
ANR and NNG have filed to recover transition costs. ANR and NNG
may file in the future to recover additional transition costs,
and Wisconsin Gas will bear a portion of such additional costs
approved by the FERC. The PSCW has permitted Wisconsin Gas to
recover transition costs from customers through its rates.
In the judgment of management, the incurrence of these
transition costs will have no material effect on Wisconsin Gas'
operations or financial condition under current PSCW policy.
See Note 7a to Notes to Consolidated Financial Statements
contained in Exhibit 13, the Company's 1995 Annual Report to
Shareholders, which note is hereby incorporated herein by
reference.
(3) Gas Cost Recovery Mechanism
The PSCW has instituted a proceeding to determine whether
changes should be made to the purchased gas adjustment ("PGA")
mechanism. In particular, the PSCW is examining whether to
replace the PGA with an incentive mechanism. In general, an
incentive gas cost recovery mechanism would establish a targeted
gas cost, and the utility would be rewarded or penalized based
on its gas costs relative to the target. Hearings are scheduled
for March 1996 and it is expected that any changes to the
current PGA will be effective November 1, 1996. The Company
cannot predict what, if any, changes the PSCW may order, nor the
impact such changes would have.
(4) Service Area Expansion
In recent years, Wisconsin Gas has increased its efforts to
obtain regulatory approvals to extend gas service to previously
unserved communities. In 1995, Wisconsin Gas added nearly
10,000 customers. Over the last five years, Wisconsin Gas has
extended service to 99 new communities and added 52,000
customers.
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(5) Changing Regulatory Environment
The PSCW has instituted a proceeding to consider how its
regulation of gas distribution utilities should change to
reflect the changing competitive environment in the gas
industry. To date, the PSCW has made a policy decision to
deregulate gas costs for customer segments with workably
competitive market choices. The PSCW has identified numerous
issues which must be resolved before its policy can be
implemented. A generic proceeding has been instituted during
which these issues will be aired and decided. Hearings are
scheduled to begin in January 1996, with the expectation that
the new regulatory framework will be implemented by the end of
1996. The Company is unable to determine what impact this
proceeding may have on Wisconsin Gas' operations or financial
position.
E. Employees
At December 31, 1995, the energy group had 1,098 full-time
equivalent active employees.
2. MANUFACTURING OF PUMPS AND FLUID PROCESSING AND FILTRATION
EQUIPMENT
A. General
The Company's manufacturing subsidiaries manufacture pumps
and fluid processing and filtration equipment for residential,
agricultural and industrial markets world wide. Manufacturing
and assembly activities are conducted in plants in the United
States, United Kingdom, Australia, Italy, New Zealand, Russia,
Germany and Mexico.
B. U.S. Operations
Water products include jet, centrifugal, sump, submersible
and submersible turbine water pumps, water storage and pressure
tanks, filters, and pump and tank systems. These products pump,
filter and store water used for drinking, cooking, washing and
livestock watering, and are used in private and public swimming
pools, spas, "hot tubs", jetted bathtubs, and fountains. The
manufacturing businesses also produce large higher pressure and
capacity water pumps used in agricultural and turf irrigation
systems and in a wide variety of commercial, industrial and
municipal fluids-handling applications.
12
Small, high performance pumps, and related fluids-handling
products, are used in four primary markets: (1) the food
service industry, where gas operated pumps are used for pumping
soft drinks made from syrups, and electric motor driven pumps
are used for water boost and drink dispensing; (2) the
recreational vehicle and marine markets, where electric motor
driven pumps are used for a variety of applications including
pumping potable water in travel trailers, motor homes, camping
trailers and boats, and for other applications including marine
wash down, bilge and live well pumping; (3) industrial markets,
where applications are concentrated in the soil extraction
market for use in carpet cleaning machines, agricultural markets
for spraying agricultural pesticides and fertilizers, and
general industrial applications requiring fluid handling; and
(4) the water purification industry, where electric motor driven
pumps are used to pressurize reverse osmosis systems and for
water transfer.
Sales of pumps and water processing equipment are somewhat
related to the seasons of the year as well as the level of acti-
vity in the housing construction industry and are sensitive to
weather, interest rates, discretionary income, and leisure and
recreation spending. The markets for most water and industrial
products are highly competitive, with price, service and product
performance all being important competitive factors. The
Company believes it is a leading producer of pumps for private
water systems and swimming pools and spas and for the food
service and recreational vehicle markets. Management believes
the Company also ranks among the larger producers of pool and
spa filters and submersible turbine pumps. Major brand names
under trademarks include "STA-RITE", "BERKELEY", "SHURflo",
"FLOTEC","Aquatools", "AQUALITY", "FoamPro", "ONGA", "Hypro",
"Sherwood", "SherTech" and "Nocchi".
Domestic pumps and water products are sold and serviced
primarily through a network of independent distributors,
dealers, retailers and manufacturers' representatives serving
the well drilling, hardware, plumbing, pump installing,
irrigation, pool and spa, food service, recreational vehicle,
marine, industrial and do-it-yourself markets. Sales are also
made on a private brand basis to large customers in all water
products markets and to original equipment manufacturers.
Backlog of orders for pumps and water products is not a
significant indicator of future sales.
13
C. International Operations
International operations are conducted primarily by
international subsidiaries and export operations from the United
States. Products are sold to markets in approximately 100
countries on six continents. Foreign manufacturing is carried
out by United Kingdom, German, Australian, New Zealand, Italian,
Mexican and Russian subsidiaries. The products sold in the
international markets in some cases are similar to those sold in
the United States, but in many instances have distinct features
required for those markets. Product distribution channels are
similar to those for domestic markets. Non-domestic sales,
including exports, were 39% of 1995 manufacturing group sales.
D. Raw Materials and Patents
Raw materials essential to the manufacturing operations are
available from various established sources in the United States
and overseas. The principal raw materials needed for production
of the Company's primary lines of products include cast iron,
aluminum and bronze castings for pumps; copper wire and aluminum
for motors; stainless and carbon sheet steel, bar steel and
tubing; plastic resins for injection molded components; and
powdered metal components. The manufacturing units also purchase
from third party suppliers completely assembled electric motors,
plastic molded parts, elastomers for valves and diaphragms,
components for electric motors, stamped and die cast metal
parts, and hardware and electrical components. Although the
manufacturing subsidiaries own a number of patents and hold
licenses for manufacturing rights under other patents, no one
patent or group of patents is critical to the success of the
manufacturing businesses as a whole.
E. Employees
At December 31, 1995, the manufacturing group had 2,261 full
time equivalent active employees.
Item 2. PROPERTIES
(a) Capital Expenditures
The Company's capital expenditures for the year ended
December 31, 1995, totaled $56.2 million. Retirements during
this period totaled $8.1 million. Except as discussed under
"Legal Proceedings", the Company does not expect to make any
material capital expenditures for environmental control
facilities in 1996.
14
(b) Energy
Wisconsin Gas owns a distribution system which, on December
31, 1995, included approximately 8,300 miles of distribution and
transmission mains, 414,000 services and 539,000 active meters.
Wisconsin Gas' distribution system consists almost entirely of
plastic and coated steel pipe. Wisconsin Gas also owns its main
office building in Milwaukee, office buildings in certain other
communities in which it serves, gas regulating and metering sta-
tions, peaking facilities and its major service centers,
including garage and warehouse facilities.
The Milwaukee and other office buildings, the principal
service facilities and the gas distribution systems of Wisconsin
Gas are owned by it in fee subject to the lien of its Indenture
of Mortgage and Deed of Trust, dated as of November 1, 1950,
under which its first mortgage bonds are issued, and to permis-
sible encumbrances as therein defined. Where distribution mains
and services occupy private property, Wisconsin Gas in some, but
not all, instances has obtained consents, permits or easements
for such installations from the apparent owners or those in
possession, generally without an examination of title.
(c) Manufacturing of Pumps, Fluid Processing and Filtration
Equipment
The manufacturing group has 15 manufacturing facilities
located in California (2), Michigan, Minnesota, Nebraska,
Wisconsin (2), Germany, Australia (2), Italy (2), New Zealand,
Russia and Mexico. These plants contain a total of
approximately 1,466,000 square feet of floor space. These
businesses also own or lease ten sales/distribution facilities
in the United States, six in Australia, two in England, and one
each in Canada, France, Italy, Mexico, New Zealand and
Singapore.
Item 3. LEGAL PROCEEDINGS
There are no material legal proceedings pending, other than
ordinary routine litigation incidental to the Company's busi-
nesses, to which the Company or any of its subsidiaries is a
party, except as discussed below. There are no material legal
proceedings to which any officer or director of the Company or
any of its subsidiaries is a party or has a material interest
adverse to the Company. There are no material administrative or
judicial proceedings arising under environmental quality or
civil rights statutes pending or known to be contemplated by
governmental agencies to which the Company or any of its
subsidiaries is or would be a party.
15
The manufacturing subsidiaries are involved in various
environmental matters, including matters in which the
subsidiaries or alleged predecessors have been named as
potentially responsible parties under the Comprehensive
Environmental Response Compensation and Liability Act
("CERCLA"). The Company has established accruals for all
environmental contingencies of which management is aware in
accordance with generally accepted accounting principles. In
establishing these accruals, management considered (a) reports
of environmental consultants retained by the Company, (b) the
costs incurred to date by the Company at sites where clean-up is
presently ongoing and the estimated costs to complete the
necessary remediation work remaining at such sites, (c) the
financial solvency, where appropriate, of other parties that
have been responsible for remediation at specified sites, and
(d) the experience of other parties who have been involved in
the remediation of comparable sites. The accruals recorded by
the Company with respect to environmental matters have not been
reduced by potential insurance or other recoveries and are not
discounted. Although the Company has and will continue to
pursue such claims against insurance carriers and other
responsible parties, future potential recoveries remain
uncertain, and, therefore, were not recorded as a reduction to
the estimated gross environmental liabilities. Based on the
foregoing and given current information, management believes
that future costs in excess of the amounts accrued on all
presently known and quantifiable environmental contingencies
will not be material to the Company's financial position or
results of operations.
Sta-Rite has entered into a contract with the Wisconsin
Department of Natural Resources ("WDNR") to perform and complete
the Remedial Investigation/Feasibility Study and Remedial
Design/Remedial Action phases of the Federal Superfund
environmental process for the Delavan, Wisconsin Municipal Well
No. 4, which is located close to one of Sta-Rite's facilities.
In 1990 and 1991, Sta-Rite provided reserves to cover the
estimated costs under the contract. No additions to reserves
were required since 1991. Although management believes the
amounts reserved will be adequate to effect any necessary
restoration, there is a possibility that additional costs may be
incurred.
In July 1994, Sta-Rite was notified by the WDNR that it
believed solvents used at a manufacturing site previously
operated by Sta-Rite have migrated and contributed to the
contamination of a Deerfield, Wisconsin municipal well, serving
Deerfield residents, and surrounding property. In August, 1995
the WDNR issued an order to investigate, restore and repair the
natural resouces located in Deerfield. Based upon the
preliminary investigation and reserves established, the Company
believes that the resolution of this matter will not have a
material adverse effect upon its financial condition. However,
there is a possibility that costs in excess of the amount
reserved may be incurred in the future.
16
Wisconsin Gas has identified two previously owned sites on
which it operated manufactured gas plants that are of
environmental concern. Such plants ceased operations prior to
the mid-1950's. Wisconsin Gas has engaged an environmental
consultant to help determine the nature and extent of the
contamination at these sites. Based on the test results obtained
and the possible remediation alternatives available, the Company
has estimated that cleanup costs could range from $22 million to
$75 million. As of December 31, 1995, the Company has accrued
$36.4 million for future cleanup costs. These estimates are
based on current undiscounted costs. It should also be noted
that the numerous assumptions such as the type and extent of
contamination, available remediation techniques, and regulatory
requirements which are used in developing these estimates are
subject to change as new information becomes available. Any such
changes in assumptions could have a significant impact on the
potential liability. Due to anticipated regulatory treatment,
changes in the recorded liability do not immediately impact net
income.
The WDNR issued a Probable Responsible Party letter to
Wisconsin Gas for these two sites in September, 1994. Following
receipt of this letter, Wisconsin Gas and the WDNR held an
initial meeting to discuss the sites. At the meeting it was
agreed that Wisconsin Gas would prepare a remedial action
options report from which it will select specific remedial
actions for recommendation to the WDNR. During 1995, Wisconsin
Gas gathered additional environmental data regarding these two
sites, held extensive discussions concerning remedial options
with current land owners and solicited information from
environmental consulting and remediation firms on technology and
approaches that would best suit the sites. The efforts were
directed toward preparing a remedial action options report and
recommendations for presentation to the WDNR in 1996. Once such
a plan is approved, initial remediation work will begin.
Expenditures over the next three years are expected to total
approximately $20 million. Although most of the work and costs
are expected to be incurred in the first few years of the plan,
monitoring of sites and other necessary actions may be
undertaken for up to 30 years.
In March 1994, Wisconsin Gas commenced suit against nine
insurance carriers seeking a declaratory judgment regarding
insurance coverage for the two sites. Settlements were reached
with each of the carriers during 1994. Additional insurance
recoveries are being pursued. Wisconsin Gas expects full
recovery of incurred remediation costs, less amounts recovered
from insurance carriers. If the amount recovered from the
insurance carriers is insufficient to remediate both sites,
expenditures not recovered are expected to be allowed full
recovery (other than for carrying costs) in rates based upon
recent PSCW orders. Accordingly, a regulatory asset has been
recorded for the accrued cost. Certain related investigation
costs incurred to date are currently being recovered in utility
rates. However, any incurred costs not yet recovered in rates
are not allowed by the PSCW to earn a return. As of December
31, 1995, $4.8 million of such costs had been incurred.
17
Wisconsin Gas also owns a service center that is constructed
on a site that was previously owned by the City of Milwaukee and
was used by the City as a public dump site. Wisconsin Gas has
conducted a site assessment at the request of the WDNR and has
sent the report of its assessment to the WDNR. Management
cannot predict whether or not the WDNR will require any
remediation action, nor the extent or cost of any remediation
actions that may be required. In the judgment of management,
any remediation costs incurred by Wisconsin Gas will be
recoverable from the City of Milwaukee or in Wisconsin Gas'
rates pursuant to the PSCW's orders discussed above.
See Note 7c to Notes to Consolidated Financial Statements
contained in Exhibit 13, the Company's 1995 Annual Report to
Shareholders, which note is hereby incorporated herein by
reference.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders
during the fourth quarter of 1995.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following sets forth the names and ages of, and the
offices held by, the executive officers of the Company. The
officers serve one-year terms commencing with their election at
the meeting of the Board of Directors following the annual
meeting of shareholders in April.
Name Age Offices Held
- -------------------- --- --------------------------------
George E. Wardeberg 60 President and Chief Executive
Officer of the Company, and
Chairman of Wisconsin Gas,
Sta-Rite, SHURflo, Hypro and WICOR
Energy Services
Thomas F. Schrader 46 Vice President of the Company and
President and Chief Executive
Officer of Wisconsin Gas and WICOR
Energy Services
James C. Donnelly 50 Vice President of the Company and
President and Chief Executive
Officer of Sta-Rite
Joseph P. Wenzler 54 Vice President, Treasurer and
Chief Financial Officer of the
Company; Vice President and Chief
Financial Officer of Wisconsin
Gas; Treasurer and Secretary of
SHURflo and Hypro; and Vice
President and Treasurer of WICOR
Energy Services
Robert A. Nuernberg 56 Secretary of the Company and WICOR
Energy Services; and Vice-
President-Corporate Relations and
Secretary of Wisconsin Gas
18
Each of the executive officers has held his position for
more than five years, except as follows:
Mr. Wardeberg was elected to his current positions
effective February 1, 1994. Prior thereto, he was President and
Chief Operating Officer of the Company and Vice Chairman and
Chief Executive Officer of Sta-Rite from 1992 to 1994; Vice
Chairman of Wisconsin Gas and SHURflo from 1993 to 1994; and
Vice President-Water Systems of Sta-Rite from 1989 to 1992.
Prior thereto, he was Vice Chairman and Chief Operating Officer
of Whirlpool Corporation.
Mr. Donnelly was elected President and Chief Executive
Officer of Sta-Rite in 1994. He has been a Vice President of
the Company since 1987. Previously, he served as President and
Chief Operating Officer of Sta-Rite from 1992 to 1994, and as
Vice President, Treasurer and Chief Financial Officer of the
Company and Wisconsin Gas from 1990 to 1992. Mr. Donnelly
joined the Company and Wisconsin Gas in 1987 as Vice President
and Treasurer. Prior thereto, he served as Vice President-
Finance of Eastern Gas and Fuel Associates.
Mr. Wenzler was elected Vice President, Treasurer and Chief
Financial Officer of the Company and Vice President and Chief
Financial Officer of Wisconsin Gas in 1992 and as Treasurer and
Secretary of SHURflo in 1993. Prior thereto, he served as Vice
President of the Company and President and Chief Executive
Officer of Sta-Rite from 1990 to 1992, and President and Chief
Operating Officer of Sta-Rite from 1986 to 1990.
Each of the executive officers assumed their positions with
Hypro in July, 1995, when Hypro was acquired, and with WICOR
Energy Services in March, 1995, when that company was formed.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's common stock and the associated common stock
purchase rights (which do not currently trade independently of
the common stock) are traded on the New York Stock Exchange.
For information regarding the high and low sales prices for the
Company's common stock and dividends paid per share in each
quarter of 1995 and 1994, see the section entitled "Investor
Information" set forth in the Company's 1995 Annual Report to
Shareholders. Such section is included in Exhibit 13 hereto and
is hereby incorporated herein by reference.
At December 31, 1995, there were 15,238 holders of record
of WICOR common stock.
19
The Company's ability to pay dividends is dependent to a
great extent on the ability of its subsidiaries to pay
dividends. The Wisconsin Business Corporation Law and the
indentures and agreements under which debt of the Company and
its subsidiaries is outstanding each contain certain
restrictions on the payment of dividends on common stock by the
Company's subsidiaries. See Note 6 of Notes to Consolidated
Financial Statements contained in Exhibit 13, the Company's 1995
Annual Report to Shareholders, which note is hereby incorporated
herein by reference.
By order of the PSCW, Wisconsin Gas is generally permitted
to pay dividends up to the amount projected in its rate case
($16 million). Wisconsin Gas may pay dividends in excess of $16
million so long as the payment will not cause its equity ratio
to fall below 48.43%. If payment of projected dividends would
cause its common equity ratio to fall below 43% of total
capitalization (including short-term debt), or if payment of
additional dividends would cause its common equity ratio to fall
below 48.43%, Wisconsin Gas must obtain PSCW approval to pay
such dividends. Wisconsin Gas has projected the payment of $19
million of dividends to the Company during the 12 months ending
October 31, 1996. See Note 6 of Notes to Consolidated Financial
Statements contained in Exhibit 13, the Company's 1995 Annual
Report to Shareholders, which note is hereby incorporated herein
by reference. The PSCW desires Wisconsin Gas to target its
common equity level at 43% to 50% of total capitalization. For
the year ended December 31, 1995, Wisconsin Gas' average common
equity level was 51%.
In addition, $6.3 million of Sta-Rite net assets at
December 31, 1995, plus 50% of Sta-Rite future earnings, are
available for dividends to the Company. See Note 6 of Notes to
Consolidated Financial Statements contained in Exhibit 13, the
Company's 1995 Annual Report to Shareholders, which note is
incorporated herein by reference.
Item 6. SELECTED FINANCIAL DATA
Reference is made to the section entitled "Selected
Financial Data" set forth in the Company's 1995 Annual Report to
Shareholders. Such section is included in Exhibit 13 hereto and
is hereby incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Reference is made to the section entitled "Financial
Review" set forth in the Company's 1995 Annual Report to
Shareholders. Such section is included in Exhibit 13 hereto and
is hereby incorporated herein by reference.
20
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to the WICOR, Inc. consolidated balance
sheets and consolidated statements of capitalization as of
December 31, 1995 and 1994, and the related consolidated
statements of income, common equity and cash flow for each of
the three years in the period ended December 31, 1995, together
with the report of independent public accountants dated January
22, 1996, all appearing in Exhibit 13, the Company's 1995 Annual
Report to Shareholders, which is hereby incorporated herein by
reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There has been no change in or disagreement with the
Company's independent auditors on any matter of accounting
principles or practices or financial statement disclosure re-
quired to be reported pursuant to this item.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Reference is made to "Item No. 1: Election of Directors"
included in the WICOR proxy statement dated March 12, 1996,
which is hereby incorporated herein by reference, for the names,
ages, business experience and other information regarding
directors and nominees for director of the Company. See
"Executive Officers of the Registrant" included in Part I hereof
for information regarding executive officers of the Company.
Item 11. EXECUTIVE COMPENSATION
Reference is made to "Executive Compensation" included in
the WICOR proxy statement dated March 12, 1996, which is hereby
incorporated herein by reference, for information on compen-
sation of executive officers of the Company; provided, however,
that the subsections entitled "Board Compensation Committee
Report on Executive Compensation" and "Executive Compensation -
Performance Information" shall not be deemed to be incorporated
herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
Reference is made to "Security Ownership of Management"
included in the WICOR proxy statement dated March 12, 1996,
which is hereby incorporated herein by reference, for
information regarding voting securities of the Company
beneficially owned by its directors and officers.
21
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Reference is made to "Item No. 1: Election of Directors"
included in the WICOR proxy statement dated March 12, 1996,
which is hereby incorporated herein by reference, for the
information required to be disclosed under this item.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Annual
Report on Form 10-K:
1. All Financial Statements. The WICOR, Inc. consolidated
balance sheets and statements of capitalization as of
December 31, 1995 and 1994, and the related consolidated
statements of income, common equity and cash flow for
each of the three years in the period ended December 31,
1995, together with the report of independent public
accountants dated January 22, 1996, included in Exhibit
13, the Company's 1995 Annual Report to Shareholders,
which is incorporated herein by reference.
2. Financial statement schedules.
Schedule III Condensed Statements of Income, Retained
Earnings and Cash Flow (Parent Company
Only) for the Years Ended December 31,
1995, 1994 and 1993; Condensed Balance
Sheets (Parent Company Only) as of
December 31, 1995 and 1994; Notes to
Parent Company Only Financial Statements.
Financial statement schedules other than those referred to
above have been omitted as not applicable or not required.
3. Exhibits
3.1 WICOR, Inc. Restated Articles of Incorporation, as
amended (incorporated by reference to Exhibit 3.1 to
the Company's Form 10-K Annual Report for 1992).
3.2 WICOR, Inc. By-laws, as amended (incorporated by
reference to Exhibit 3.3 to the company's Form 10-K
Annual Report for 1994).
4.1 Indenture of Mortgage and Deed of Trust dated as of
November 1, 1950, between Milwaukee Gas Light
Company and Mellon National Bank and Trust Company
and D. A. Hazlett, Trustees (incorporated by
reference to Exhibit 7-E to Milwaukee Gas Light
Company's Registration Statement No. 2-8631).
22
4.2 Bond Purchase Agreement dated December 31, 1981,
between Wisconsin Gas Company and Teachers Insurance
and Annuity Association of America relating to the
issuance and sale of $30,000,000 principal amount of
First Mortgage Bonds, Adjustable Rate Series due
2002 (incorporated by reference to Exhibit 4.6 to
Wisconsin Gas Company's Form S-3 Registration
Statement No. 33-43729).
4.3 Indenture dated as of September 1, 1990, between
Wisconsin Gas Company and First Wisconsin Trust
Company, Trustee (incorporated by reference to
Exhibit 4.11 to Wisconsin Gas Company's Form S-3
Registration Statement No. 33-36639).
4.4 Officers' Certificate, dated as of November 19,
1991, setting forth the terms of Wisconsin Gas
Company's 7-1/2% Notes due 1998 (incorporated by
reference to Exhibit 4.1 to Wisconsin Gas Company's
Form 8-K Current Report for November, 1991).
4.5 Officers' Certificate, dated as of September 15,
1993, setting forth the terms of Wisconsin Gas
Company's 6.60% Debentures due 2013 (incorporated by
reference to Exhibit 4.1 to Wisconsin Gas Company's
Form 8-K Current Report for September, 1993).
4.6 Officers' Certificate, dated as of November 7, 1996,
setting forth the terms of Wisconsin Gas Company's
6-3/8% Notes due 2005 (incorporated by reference to
Exhibit 4 to Wisconsin Gas Company's Form 8-K
Current Report dated November 7, 1995).
4.7 Revolving Credit and Term Loan Agreement, dated as
of March 29, 1993, among Wisconsin Gas Company and
Citibank, N.A., Firstar Bank Milwaukee, N.A., Harris
Trust & Savings Bank, M&I Marshall & Ilsley Bank and
Citibank, N.A., as Agent (incorporated by reference
to Exhibit 4.2 to the Company's Quarterly Report on
Form 10-Q dated as of August 9, 1993).
4.8 Revolving Credit and Term Loan Agreement, dated as
of March 29, 1993, among Sta-Rite Industries, Inc.
and Citibank, N.A., Firstar Bank Milwaukee, N.A.,
Harris Trust & Savings Bank, M&I Marshall & Ilsley
Bank and Citibank, N.A., as Agent (incorporated by
reference to Exhibit 4.3 to the Company's Quarterly
Report on Form 10-Q dated as of August 9, 1993).
4.9 Revolving Credit and Term Loan Agreement, dated as
of March 29, 1993, among WICOR, Inc. and Citibank,
N.A., Firstar Bank Milwaukee, N.A., Harris Trust &
Savings Bank, M&I Marshall & Ilsley Bank and
Citibank, N.A., as Agent (incorporated by reference
to Exhibit 4.1 to the Company's Quarterly Report
on Form 10-Q dated as of August 9, 1993).
23
4.10 Extension of Revolving Credit and Term Loan
Agreement, effective March 10, 1995, among WICOR,
Inc. and Citibank, N.A., Firstar Bank Milwaukee,
N.A., Harris Trust & Saving Bank, M&I Marshall &
Ilsley Bank and Citibank, N.A., as Agent
(incorporated by reference to Exhibit 4.1 to the
Company's Quarterly Report on Form 10-Q dated April
28, 1995).
4.11 Extension of Revolving Credit Agreement dated March
10, 1995, among Wisconsin Gas Company and Citibank,
N.A., Firstar Bank Milwaukee, N.A., Harris Trust and
Savings Bank and M&I Marshall and Ilsley Bank and
Citibank, N.A., as Agent (incorporated by reference
to Exhibit 4.2 to the Company's Quarterly Report on
Form 10-Q dated April 28, 1995).
4.12 Extension of Revolving Credit Agreement dated March
10, 1995, among Sta-Rite and Citibank, N.A., Firstar
Bank Milwaukee, N.A., Harris Trust and Savings Bank
and M&I Marshall and Ilsley Bank and Citibank, N.A.,
as Agent (incorporated by reference to Exhibit 4.3
to the Company's Quarterly Report on Form 10-Q dated
April 28, 1995).
4.13 Rights Agreement dated as of August 29, 1989,
between WICOR, Inc. and Manufacturers Hanover Trust
Company, Rights Agent (incorporated by reference to
Exhibit 4 to the Company's Form 8-K current report
for August, 1989).
4.14 Loan Agreement, dated as of November 4, 1991, by and
among M&I Marshall & Ilsley Bank, Wisconsin Gas
Company Employees' Savings Plans Trust and WICOR,
Inc. (incorporated by reference to Exhibit 4.16 to
the Company's Form 10-K Annual Report for 1991).
4.15 Guaranty, dated as of November 4, 1991, from WICOR,
Inc. to and for the benefit of M&I Marshall & Ilsley
Bank (incorporated by reference to Exhibit 4.17 to
the Company's Form 10-K Annual Report for 1991).
4.16 Revolving Credit Agreement Amendment, effective July
12, 1995, among WICOR, Inc. and Citibank, N.A.,
Firstar Bank Milwaukee, N.A., Harris Trust and
Savings Bank, M&I Marshall and Ilsley Bank and
Citibank, N.A., as Agent (incorporated by reference
to Exhibit 4.4 to the Company's Quarterly Report on
Form 10-Q dated October 25, 1995).
4.17 Loan Agreement Amendment effective December 21,
1995, by and among Wisconsin Gas Company Employees'
Savings Plans Trust, WICOR, Inc. and M&I Marshall
and Ilsley Bank.
24
Sta-Rite Industries, Inc., a wholly-owned subsidiary
of the Registrant, is the obligor under various loan
agreements in connection with facilities financed
through the issuance of industrial development
bonds. The loan agreements and the additional
documentation relating to these bond issues are not
being filed with this Annual Report on Form 10-K in
reliance upon Item 601(b)(4)(iii) of Regulation S-K.
Copies of these documents will be furnished to the
Securities and Exchange Commission upon request.
10.1 Service Agreement dated as of June 1, 1994, among
WICOR, Inc., Wisconsin Gas Company, Sta-Rite
Industries, Inc., WEXCO of Delaware, Inc. and
SHURflo Pump Manufacturing Co.
10.2 Endorsement of Hypro Corporation dated as of July
19, 1995, to Service Agreement among WICOR, Inc.,
Wisconsin Gas Company, Sta-Rite Industries, Inc. and
WEXCO of Delaware, Inc.
10.3# WICOR, Inc. 1987 Stock Option Plan, as amended
(incorporated by reference to Exhibit 4.1 to the
Company's Form S-8 Registration Statement No.
33-67134).
10.4# Forms of nonstatutory stock option agreement used in
connection with the WICOR, Inc. 1987 Stock Option
Plan (incorporated by reference to Exhibit 10.20 to
the Company's Form 10-K Annual Report for 1991).
10.5# WICOR, Inc. 1992 Director Stock Option Plan,
(incorporated by reference to Exhibit 4.1 to the
Company's Form S-8 Registration Statement No.
33-67132).
10.6# Form of nonstatutory stock option agreement used in
connection with the WICOR, Inc. 1992 Director Stock
Option Plan (incorporated by reference to Exhibit
4.2 to the Company's Form S-8 Registration Statement
No. 33-67132).
10.7# WICOR, Inc. 1994 Long-Term Performance Plan
(incorporated by reference to Exhibit 4.1 to the
Company's Form S-8 Registration Statement No.
33-55755).
10.8# Form of nonstatutory stock option agreement used in
connection with the WICOR, Inc. 1994 Long-Term
Performance Plan, (incorporated by reference to
Exhibit 4.2 to the Company's Form S-8 Registration
Statement No. 33-55755).
10.9# Form of restricted stock agreement used in
connection with the WICOR, Inc. 1994 Long-Term
Performance Plan (incorporated by reference to
Exhibit 4.3 to the Company's Form S-8 Registration
Statement No. 33-55755).
25
10.10# WICOR, Inc. 1996 Officers' Incentive Compensation
Plan.
10.11# Wisconsin Gas Company Principal Officers'
Supplemental Retirement Income Program (incorporated
by reference to Exhibit 10.8 to the Company's Form
10-K Annual Report for 1993).
10.12# Wisconsin Gas Company 1996 Officers' Incentive
Compensation Plan.
10.13# Wisconsin Gas Company Group Travel Accident Plan
(incorporated by reference to Exhibit 10.24 to the
Company's Form 10-K Annual Report for 1992).
10.14# Form of Deferred Compensation Agreements between
Wisconsin Gas Company and certain of its executive
officers (incorporated by reference to Exhibit 10.30
to the Company's Form 10-K Annual Report for 1990).
10.15# Sta-Rite Industries, Inc. Officers Supplemental
Retirement Income Program (incorporated by reference
to Exhibit 10.28 to the Company's Form 10-K Annual
Report for 1989).
10.16# Sta-Rite Industries, Inc. 1996 Officers' Incentive
Compensation Plan.
10.17# Sta-Rite Industries, Inc. Group Travel Accident Plan
(incorporated by reference to Exhibit 10.28 to the
Company's Form 10-K Annual Report for 1992).
10.18# WICOR, Inc. Retirement Plan for Directors, as
amended (incorporated by reference to Exhibit 10.29
to the Company's Form 10-K Annual Report for 1992).
13 Portions of the WICOR, Inc. 1995 Annual Report to
Shareholders incorporated by reference herein.
21 Subsidiaries of WICOR, Inc.
23 Consent of independent public accountants.
27 Financial Data Schedule. (EDGAR version only)
99 WICOR, Inc. proxy statement dated March 12, 1996.
(Except to the extent incorporated by reference,
this proxy statement is not deemed "filed" with the
Securities and Exchange Commission as part of this
Form 10-K.)
#Indicates a plan under which compensation is paid or payable to
directors or executive officers of the Company.
(b) Reports on Form 8-K.
No Current Report on Form 8-K was filed during the fourth
quarter of 1995.
26
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: March 12, 1996 By JOSEPH P. WENZLER
------------------------------
Joseph P. Wenzler
Vice President, Treasurer, and
Chief Financial Officer
27
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed on the succeeding pages by
the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
WICOR, Inc.
Signature Title Date
GEORGE E. WARDEBERG
George E. Wardeberg President, Chief Executive March 12, 1996
Officer and Director
(Principal Executive Officer)
JOSEPH P. WENZLER
Joseph P. Wenzler Vice President, Treasurer March 12, 1996
and Chief Financial Officer
(Principal Financial Officer
and Principal Accounting
Officer)
WENDELL F. BUECHE Director March 12, 1996
Wendell F. Bueche
WILLIE D. DAVIS Director March 12, 1996
Willie D. Davis
JERE D. MCGAFFEY Director March 12, 1996
Jere D. McGaffey
DAN F. MCKEITHAN,JR Director March 12, 1996
Daniel F. McKeithan, Jr.
GUY A. OSBORN Director March 12, 1996
Guy A. Osborn
THOMAS F. SCHRADER Director March 12, 1996
Thomas F. Schrader
STUART W. TISDALE Director March 12, 1996
Stuart W. Tisdale
ESSIE M. WHITELAW Director March 12, 1996
Essie M. Whitelaw
WILLIAM B. WINTER Director March 12, 1996
William B. Winter
28
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
To WICOR, Inc.:
We have audited in accordance with generally accepted auditing
standards, the consolidated financial statements included in
Exhibit 13 to this Form 10-K, and have issued our report thereon
dated January 22, 1996. Our audit was made for the purpose of
forming an opinion on those statements taken as a whole.
Supplemental Schedule III is the responsibility of the Company's
management and is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of
the basic consolidated financial statements. This schedule has
been subjected to the auditing procedures applied in the audit
of the basic consolidated financial statements and, in our
opinion, fairly state in all material respects the financial
data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
January 22, 1996
29
Schedule III - Condensed
Parent Company Financial Statements
WICOR, INC.
(Parent Company Only)
Statement of Income
Year Ended December 31,
---------------------------------
1995 1994 1993
---------------------------------
(Thousands of Dollars)
Income:
Equity in income of subsidiaries
after dividends......................... $ 16,052 $ 10,154 $ 9,356
Cash dividends from subsidiaries.......... 23,000 23,000 21,500
Interest income and other................. 2,237 373 267
--------- --------- ---------
41,289 33,527 31,123
--------- --------- ---------
Expenses:
Operating (Supplemental Note C)........... 1,120 455 1,942
Interest ................................. 275 163 259
--------- --------- ---------
1,395 618 2,201
--------- --------- ---------
Income Before Parent Company Income Taxes... 39,894 32,909 28,922
Income Taxes................................ 367 (265) (391)
--------- --------- ---------
Net Income.................................. $ 39,527 $ 33,174 $ 29,313
========= ========= =========
The accompanying notes are an integral part of this statement.
30
Schedule III - Condensed
Parent Company Financial Statements (continued)
WICOR, INC.
(Parent Company Only)
Statement of Retained Earnings
Year Ended December 31,
---------------------------------
1995 1994 1993
---------------------------------
(Thousands of Dollars)
Balance - Beginning of Year................. $101,418 $ 94,643 $ 90,102
Add:
Net income.............................. 39,527 33,174 29,313
--------- --------- ---------
140,945 127,817 119,415
Deduct:
Cash dividends on common stock.......... 27,454 26,399 24,099
Other................................... - - 673
--------- --------- ---------
Balance - End of Year ...................... $113,491 $101,418 $ 94,643
========= ========= =========
The accompanying notes are an integral part of this statement.
31
Schedule III - Condensed
Parent Company Only Financial Statements (continued)
WICOR, INC.
Statement of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
Year Ended December 31,
(Thousands of Dollars) --------------------------------
1995 1994 1993
--------------------------------
Operations-
Net income ............................... $ 39,527 $ 33,174 $ 29,313
Adjustments to reconcile net income to
net cash flows:
Equity in (income) losses of
subsidiaries.......................... (16,052) (10,154) (9,356)
Change in deferred income taxes......... 12 (58) (73)
Change in intercompany receivables...... (11,715) 123 (7,342)
Change in income taxes payable.......... 597 1,548 6,923
Change in other current assets.......... 3 33 98
Change in other current liabilities..... 62 (254) 178
Change in other non-current assets and
liabilities........................... (1,149) (843) (185)
--------- --------- ---------
11,285 23,569 19,556
Investment Activities --------- --------- ---------
Investments in subsidiaries............... (37,875) (5,000) (12,000)
Proceeds from sale of assets.............. 5,099 - -
--------- --------- ---------
(32,776) (5,000) (12,000)
Financing Activities- --------- --------- ---------
Issuance of common stock.................. 40,285 10,649 16,682
Dividends paid on common stock, less
amounts reinvested...................... (27,454) (23,247) (21,450)
--------- --------- ---------
12,831 (12,598) (4,768)
--------- --------- ---------
Change in Cash and Cash Equivalents......... (8,660) 5,971 2,788
Cash and Cash Equivalents at Beginning
of Year................................... 13,076 7,105 4,317
--------- --------- ---------
Cash and Cash Equivalents at End of Year.... $ 4,416 $ 13,076 $ 7,105
========= ========= =========
Supplemental Disclosure of Cash Flow Information
Cash paid (received) during the year for:
Interest paid............................. $ - $ - $ 1
Income taxes paid......................... 1,525 (4,440) 2,805
The accompanying notes are an integral part of this statement.
32
Schedule III - Condensed
Parent Company Financial Statements (continued)
WICOR, INC.
(Parent Company Only)
Balance Sheet
As of December 31,
----------------------
(Thousands of Dollars) 1995 1994
----------------------
Assets
- ------
Current Assets:
Cash and cash equivalents............................. $ 4,416 $ 13,076
Intercompany receivable, net (Supplemental Note B).... 13,754 2,039
Other................................................. 76 79
---------- ----------
18,246 15,194
---------- ----------
Investment in Subsidiaries, at equity................... 337,241 286,725
---------- ----------
Deferred Income Taxes .................................. 192 204
Deferred Charges and Other.............................. 578 491
---------- ----------
$ 356,257 $ 302,614
========== ==========
Liabilities and Capitalization
- ------------------------------
Current Liabilities:
Income taxes payable.................................. $ 5,020 $ 4,423
Other................................................. 161 99
---------- ----------
5,181 4,522
---------- ----------
Deferred Credits........................................ 495 254
---------- ----------
Capitalization:
ESOP loan guarantee (Supplemental Note D)............. 5,315 6,370
---------- ----------
Common equity:
Common stock, $1 par value, authorized 60,000,000
shares; outstanding 18,237,000 and 16,918,000
shares, respectively ............................. 18,237 16,918
Other paid-in-capital .............................. 219,133 180,000
Retained earnings .................................. 113,491 101,418
Unearned compensation (Supplemental Note D)......... (5,595) (6,868)
---------- ----------
Total common equity............................... 345,266 291,468
---------- ----------
$ 356,257 $ 302,614
========== ==========
The accompanying notes are an integral part of this statement.
33
Schedule III - Condensed
Parent Company Financial Statements (continued)
WICOR, Inc.
Notes to Parent Company Only Financial Statements
The following are supplemental notes to the WICOR, Inc. (Parent
Company Only) financial statements and should be read in
conjunction with the WICOR, Inc. Consolidated Financial
Statements and Notes thereto included herein under Item 8:
SUPPLEMENTAL NOTES
A. The parent company files a consolidated Federal income
tax return with its subsidiaries.
B. Net amounts due from subsidiaries result from
intercompany transactions including advances and Federal
income tax liabilities, less payments of expenses by
subsidiaries on behalf of WICOR, Inc.
C. During 1995, 1994 and 1993, the parent company allocated
certain administrative and operating expenses to its
subsidiaries using an allocation method approved by the
PSCW:
<CAPTIONS>
1995 1994 1993
---------- ---------- ----------
Administrative and operating
expenses allocated
to subsidiaries $2,409,000 $2,452,000 $2,388,000
========== ========== ==========
D. In November 1991, WICOR, Inc. (Parent Company Only)
established an Employee Stock Ownership Plan (ESOP)
covering non-union employees of Wisconsin Gas. Because
the parent company has guaranteed the loan, the unpaid
balance is shown as a liability on the balance sheet with
a like amount of unearned compensation recorded as a
reduction of stockholders' equity.
The ESOP trustee is repaying the $10 million loan with
dividends paid on the shares of WICOR common stock in the
ESOP and with Wisconsin Gas contributions to the ESOP.
34
3.1 WICOR, Inc. Restated Articles of Incorporation, as
amended (incorporated by reference to Exhibit 3.1 to
the Company's Form 10-K Annual Report for 1992).
3.2 WICOR, Inc. By-laws, as amended (incorporated by
reference to Exhibit 3.3 to the company's Form 10-K
Annual Report for 1994).
4.1 Indenture of Mortgage and Deed of Trust dated as of
November 1, 1950, between Milwaukee Gas Light
Company and Mellon National Bank and Trust Company
and D. A. Hazlett, Trustees (incorporated by
reference to Exhibit 7-E to Milwaukee Gas Light
Company's Registration Statement No. 2-8631).
4.2 Bond Purchase Agreement dated December 31, 1981,
between Wisconsin Gas Company and Teachers Insurance
and Annuity Association of America relating to the
issuance and sale of $30,000,000 principal amount of
First Mortgage Bonds, Adjustable Rate Series due
2002 (incorporated by reference to Exhibit 4.6 to
Wisconsin Gas Company's Form S-3 Registration
Statement No. 33-43729).
4.3 Indenture dated as of September 1, 1990, between
Wisconsin Gas Company and First Wisconsin Trust
Company, Trustee (incorporated by reference to
Exhibit 4.11 to Wisconsin Gas Company's Form S-3
Registration Statement No. 33-36639).
4.4 Officers' Certificate, dated as of November 19,
1991, setting forth the terms of Wisconsin Gas
Company's 7-1/2% Notes due 1998 (incorporated by
reference to Exhibit 4.1 to Wisconsin Gas Company's
Form 8-K Current Report for November, 1991).
4.5 Officers' Certificate, dated as of September 15,
1993, setting forth the terms of Wisconsin Gas
Company's 6.60% Debentures due 2013 (incorporated by
reference to Exhibit 4.1 to Wisconsin Gas Company's
Form 8-K Current Report for September, 1993).
4.6 Officers' Certificate, dated as of November 7, 1996,
setting forth the terms of Wisconsin Gas Company's
6-3/8% Notes due 2005 (incorporated by reference to
Exhibit 4 to Wisconsin Gas Company's Form 8-K
Current Report dated November 7, 1995).
4.7 Revolving Credit and Term Loan Agreement, dated as
of March 29, 1993, among Wisconsin Gas Company and
Citibank, N.A., Firstar Bank Milwaukee, N.A., Harris
Trust & Savings Bank, M&I Marshall & Ilsley Bank and
Citibank, N.A., as Agent (incorporated by reference
to Exhibit 4.2 to the Company's Quarterly Report on
Form 10-Q dated as of August 9, 1993).
35
4.8 Revolving Credit and Term Loan Agreement, dated as
of March 29, 1993, among Sta-Rite Industries, Inc.
and Citibank, N.A., Firstar Bank Milwaukee, N.A.,
Harris Trust & Savings Bank, M&I Marshall & Ilsley
Bank and Citibank, N.A., as Agent (incorporated by
reference to Exhibit 4.3 to the Company's Quarterly
Report on Form 10-Q dated as of August 9, 1993).
4.9 Revolving Credit and Term Loan Agreement, dated as
of March 29, 1993, among WICOR, Inc. and Citibank,
N.A., Firstar Bank Milwaukee, N.A., Harris Trust &
Savings Bank, M&I Marshall & Ilsley Bank and
Citibank, N.A., as Agent (incorporated by reference
to Exhibit 4.1 to the Company's Quarterly Report
on Form 10-Q dated as of August 9, 1993).
4.10 Extension of Revolving Credit and Term Loan
Agreement, effective March 10, 1995, among WICOR,
Inc. and Citibank, N.A., Firstar Bank Milwaukee,
N.A., Harris Trust & Saving Bank, M&I Marshall &
Ilsley Bank and Citibank, N.A., as Agent
(incorporated by reference to Exhibit 4.1 to the
Company's Quarterly Report on Form 10-Q dated April
28, 1995).
4.11 Extension of Revolving Credit Agreement dated March
10, 1995, among Wisconsin Gas Company and Citibank,
N.A., Firstar Bank Milwaukee, N.A., Harris Trust and
Savings Bank and M&I Marshall and Ilsley Bank and
Citibank, N.A., as Agent (incorporated by reference
to Exhibit 4.2 to the Company's Quarterly Report on
Form 10-Q dated April 28, 1995).
4.12 Extension of Revolving Credit Agreement dated March
10, 1995, among Sta-Rite and Citibank, N.A., Firstar
Bank Milwaukee, N.A., Harris Trust and Savings Bank
and M&I Marshall and Ilsley Bank and Citibank, N.A.,
as Agent (incorporated by reference to Exhibit 4.3
to the Company's Quarterly Report on Form 10-Q dated
April 28, 1995).
4.13 Rights Agreement dated as of August 29, 1989,
between WICOR, Inc. and Manufacturers Hanover Trust
Company, Rights Agent (incorporated by reference to
Exhibit 4 to the Company's Form 8-K current report
for August, 1989).
4.14 Loan Agreement, dated as of November 4, 1991, by and
among M&I Marshall & Ilsley Bank, Wisconsin Gas
Company Employees' Savings Plans Trust and WICOR,
Inc. (incorporated by reference to Exhibit 4.16 to
the Company's Form 10-K Annual Report for 1991).
36
4.15 Guaranty, dated as of November 4, 1991, from WICOR,
Inc. to and for the benefit of M&I Marshall & Ilsley
Bank (incorporated by reference to Exhibit 4.17 to
the Company's Form 10-K Annual Report for 1991).
4.16 Revolving Credit Agreement Amendment, effective July
12, 1995, among WICOR, Inc. and Citibank, N.A.,
Firstar Bank Milwaukee, N.A., Harris Trust and
Savings Bank, M&I Marshall and Ilsley Bank and
Citibank, N.A., as Agent (incorporated by reference
to Exhibit 4.4 to the Company's Quarterly Report on
Form 10-Q dated October 25, 1995).
4.17* Loan Agreement Amendment effective December 21,
1995, by and among Wisconsin Gas Company Employees'
Savings Plans Trust, WICOR, Inc. and M&I Marshall
and Ilsley Bank.
Sta-Rite Industries, Inc., a wholly-owned subsidiary
of the Registrant, is the obligor under various loan
agreements in connection with facilities financed
through the issuance of industrial development
bonds. The loan agreements and the additional
documentation relating to these bond issues are not
being filed with this Annual Report on Form 10-K in
reliance upon Item 601(b)(4)(iii) of Regulation S-K.
Copies of these documents will be furnished to the
Securities and Exchange Commission upon request.
10.1* Service Agreement dated as of June 1, 1994, among
WICOR, Inc., Wisconsin Gas Company, Sta-Rite
Industries, Inc., WEXCO of Delaware, Inc. and
SHURflo Pump Manufacturing Co.
10.2* Endorsement of Hypro Corporation dated as of July
19, 1995, to Service Agreement among WICOR, Inc.,
Wisconsin Gas Company, Sta-Rite Industries, Inc. and
WEXCO of Delaware, Inc.
10.3# WICOR, Inc. 1987 Stock Option Plan, as amended
(incorporated by reference to Exhibit 4.1 to the
Company's Form S-8 Registration Statement No.
33-67134).
10.4# Forms of nonstatutory stock option agreement used in
connection with the WICOR, Inc. 1987 Stock Option
Plan (incorporated by reference to Exhibit 10.20 to
the Company's Form 10-K Annual Report for 1991).
10.5# WICOR, Inc. 1992 Director Stock Option Plan,
(incorporated by reference to Exhibit 4.1 to the
Company's Form S-8 Registration Statement No.
33-67132).
37
10.6# Form of nonstatutory stock option agreement used in
connection with the WICOR, Inc. 1992 Director Stock
Option Plan (incorporated by reference to Exhibit
4.2 to the Company's Form S-8 Registration Statement
No. 33-67132).
10.7# WICOR, Inc. 1994 Long-Term Performance Plan
(incorporated by reference to Exhibit 4.1 to the
Company's Form S-8 Registration Statement No.
33-55755).
10.8# Form of nonstatutory stock option agreement used in
connection with the WICOR, Inc. 1994 Long-Term
Performance Plan, (incorporated by reference to
Exhibit 4.2 to the Company's Form S-8 Registration
Statement No. 33-55755).
10.9# Form of restricted stock agreement used in
connection with the WICOR, Inc. 1994 Long-Term
Performance Plan (incorporated by reference to
Exhibit 4.3 to the Company's Form S-8 Registration
Statement No. 33-55755).
10.10#* WICOR, Inc. 1996 Officers' Incentive Compensation
Plan.
10.11# Wisconsin Gas Company Principal Officers'
Supplemental Retirement Income Program (incorporated
by reference to Exhibit 10.8 to the Company's Form
10-K Annual Report for 1993).
10.12#* Wisconsin Gas Company 1996 Officers' Incentive
Compensation Plan.
10.13# Wisconsin Gas Company Group Travel Accident Plan
(incorporated by reference to Exhibit 10.24 to the
Company's Form 10-K Annual Report for 1992).
10.14# Form of Deferred Compensation Agreements between
Wisconsin Gas Company and certain of its executive
officers (incorporated by reference to Exhibit 10.30
to the Company's Form 10-K Annual Report for 1990).
10.15# Sta-Rite Industries, Inc. Officers Supplemental
Retirement Income Program (incorporated by reference
to Exhibit 10.28 to the Company's Form 10-K Annual
Report for 1989).
10.16#* Sta-Rite Industries, Inc. 1996 Officers' Incentive
Compensation Plan.
10.17# Sta-Rite Industries, Inc. Group Travel Accident Plan
(incorporated by reference to Exhibit 10.28 to the
Company's Form 10-K Annual Report for 1992).
38
10.18# WICOR, Inc. Retirement Plan for Directors, as
amended (incorporated by reference to Exhibit 10.29
to the Company's Form 10-K Annual Report for 1992).
13* Portions of the WICOR, Inc. 1995 Annual Report to
Shareholders incorporated by reference herein.
21* Subsidiaries of WICOR, Inc.
23* Consent of independent public accountants.
27* Financial Data Schedule. (EDGAR version only)
99* WICOR, Inc. proxy statement dated March 12, 1996.
(Except to the extent incorporated by reference,
this proxy statement is not deemed "filed" with the
Securities and Exchange Commission as part of this
Form 10-K.)
* Idicates document filed herewith.
#Indicates a plan under which compensation is paid or payable to
directors or executive officers of the Company.