PORT HURON, Mich., July 10 /PRNewswire/ -- SEMCO ENERGY, Inc.
(Nasdaq: SMGS) today announced projected annual pre-tax savings of between
$5-$6 million as a result of employee-related programs being implemented
during 1998. The programs include the introduction of a new flexible benefit
plan for employees, modifications to the pension plan and an early retirement
plan. A portion of these savings will be realized in 1998 and the actual
impact on Company earnings going forward will depend on a number of factors
including income taxes, the Company's incentive clause, future benefit plan
performance and operating initiatives.
These programs are in keeping with the Company's strategic objectives of
maintaining a competitive work force, improving profitability, increasing
financial strength and enhancing shareholder value, said Chief Financial
Officer Robert J. Digan, II. "The successful implementation of the programs
are expected to align employee levels and the benefit package with those of
other progressive companies. They also result in significant savings to the
Company. These changes, along with selling our unprofitable assets
(i.e. NOARK pipeline) and the building of our non-utility businesses, are
strategic steps the Company is taking to continue its leadership position in
the competitive 21st Century marketplace."
The new flexible benefit plan goes into effect during the third quarter of
1998. The cafeteria-style program gives employees a set amount of "benefit
dollars." Employees may select benefits from a number of options and levels
of coverage which best meet their individual needs. If the cost of the
benefits exceeds the amount of "benefit dollars," the difference is paid by
the employee. Formerly, all employees were provided one set of benefits.
This approach was costly to the Company and less efficient in providing
benefits to employees than the new plan. The company anticipates savings of
approximately $100,000-$300,000 per year under the new plan.
Previously this year, the Company modified the employee pension plan to
make it more comparable with other utilities and major employers in the
region. These modifications are anticipated to result in a cost savings to
the Company of approximately $2 million per year.
The Company expects to save another $3.5 million per year as a result of
101 employees accepting an early retirement plan offered in the first quarter
"The cumulative impact of these actions is anticipated to save between $5
and $6 million on an annualized pre-tax basis. These initiatives are
important steps for SEMCO ENERGY to be a successful company in the future,"
SEMCO ENERGY is an energy-focused holding company. It has three
subsidiaries: 1) SEMCO ENERGY GAS COMPANY distributes regulated natural gas to
240,000 customers in Michigan's Upper and Lower Peninsula; 2) SEMCO ENERGY
SERVICES markets gas and related services and 3) SEMCO ENERGY VENTURES
operates and acquires companies involved in natural gas construction, energy
engineering and propane operations.
THE "SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995. This press release contains forward-looking statements that
involve risks and uncertainties, including but not limited to, operating
expenses, operating income, returns on invested assets, regulatory approval
processes and other risks detailed from time to time in the Company's
Securities and Exchange Commission filings.
SOURCE SEMCO ENERGY, Inc.
Company News On-Call: http: //www.prnewswire.com or fax, 800-758-5804, ext. 769113
CONTACT: Edric R. Mason, Jr. of SEMCO ENERGY, 810-989-4104, or fax, 810-989-4098