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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

 

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarterly Period Ended March 31, 2005

 

 

Commission

Registrant; State of Incorporation

IRS Employer

File Number

Address; and Telephone Number

Identification No.
     
     
     

001-09057

WISCONSIN ENERGY CORPORATION

39-1391525
 

(A Wisconsin Corporation)

  
 

231 West Michigan Street

  
 

P.O. Box 1331

  
 

Milwaukee, WI 53201

  
 

(414) 221-2345

  

 

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 by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes [X]    No [  ]

Indicate the number of shares outstanding of each of the Registrant's classes of common stock as of the latest practicable date (March 31, 2005):

 

Common Stock, $.01 Par Value,

116,985,602 shares outstanding.




 

 

 

 
 

WISCONSIN ENERGY CORPORATION

  
 

                                    

  
     
 

FORM 10-Q REPORT FOR THE QUARTER ENDED MARCH 31, 2005

  
     
     
     
 

TABLE OF CONTENTS

  

Item

  

Page
     
 

Introduction .......................................................................................................................

 3
     
     
 

Part I -- Financial Information

  
     

1.

Financial Statements

  
     
 

    Consolidated Condensed Income Statements ...................................................................

 4
     
 

    Consolidated Condensed Balance Sheets .........................................................................

 5
     
 

    Consolidated Condensed Statements of Cash Flows ........................................................

 6
     
 

    Notes to Consolidated Condensed Financial Statements ..................................................

 7
     

2.

Management's Discussion and Analysis of

  
 

    Financial Condition and Results of Operations .................................................................

 14
     

3.

Quantitative and Qualitative Disclosures About Market Risk ..............................................

 31
     

4.

Controls and Procedures ........................................................................................................

 32
     
 

Part II -- Other Information

  
     

1.

Legal Proceedings ..................................................................................................................

 32
     

2.

Unregistered Sales of Equity Securities and

Use of Proceeds [and Issuer Purchases of Equity Securities] ................................................

 33
     

6.

Exhibits ...................................................................................................................................

 34
     
 

Signatures ...............................................................................................................................

 35

 

 



2

 

INTRODUCTION

Wisconsin Energy Corporation is a diversified holding company which, during this reporting period, conducted its operations primarily in two operating segments: a utility energy segment and a non-utility energy segment. The sale of our former manufacturing segment was completed effective July 31, 2004, and is reported in the 2004 results as discontinued operations. Unless qualified by their context when used in this document, the terms Wisconsin Energy, the Company, our, us or we refer to the holding company and all of its subsidiaries. Our primary subsidiaries are Wisconsin Electric Power Company (Wisconsin Electric), Wisconsin Gas LLC (Wisconsin Gas) and W.E. Power, LLC (We Power).

Utility Energy Segment:   Our utility energy segment consists of: Wisconsin Electric, which serves electric customers in Wisconsin and the Upper Peninsula of Michigan, gas customers in Wisconsin and steam customers in metro Milwaukee, Wisconsin; Wisconsin Gas, which serves gas customers in Wisconsin and water customers in suburban Milwaukee, Wisconsin; and Edison Sault Electric Company (Edison Sault), which serves electric customers in the Upper Peninsula of Michigan. Wisconsin Electric and Wisconsin Gas operate under the trade name of "We Energies".

Non-Utility Energy Segment:   Our non-utility energy segment consists of We Power and Wisvest Corporation (Wisvest). We Power was formed in 2001 to design, construct, own, finance and lease to Wisconsin Electric the new generating capacity included in our Power the Future strategy, which is described further in this report. Wisvest owns and has investments in electric generating facilities and other energy-related entities and assets. As a result of a change in corporate strategy to focus on Power the Future, we have reduced the operations of Wisvest.

Other:   Other non-utility operating subsidiaries of Wisconsin Energy include Minergy Corp. (Minergy), which has $25.3 million of assets and develops and markets renewable energy and recycling technologies, and Wispark LLC (Wispark), which has $121.6 million of assets and develops and invests in real estate.

We have prepared the unaudited interim financial statements presented in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). We have condensed or omitted some information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles pursuant to these rules and regulations. Our financial statements should be read in conjunction with the financial statements and notes thereto included in our 2004 Annual Report on Form 10-K.

 

 



3

 

PART I -- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

WISCONSIN ENERGY CORPORATION

CONSOLIDATED CONDENSED INCOME STATEMENTS

(Unaudited)

Three Months Ended March 31

2005

2004

(Millions of Dollars, Except Per Share Amounts)

Operating Revenues

$1,099.1

$1,065.0

Operating Expenses

Fuel and purchased power

158.0

144.1

Cost of gas sold

410.7

385.8

Other operation and maintenance

258.9

254.4

Depreciation, decommissioning

and amortization

82.2

75.6

Property and revenue taxes

23.0

22.0

Total Operating Expenses

932.8

881.9

Operating Income

166.3

183.1

Other Income, Net

18.1

4.7

Interest Expense

42.4

54.2

Income From Continuing

Operations Before Income Taxes

142.0

133.6

Income Taxes

52.1

50.2

Income from Continuing Operations

89.9

83.4

Income from Discontinued

Operations, Net of Tax (Note 2)

-

7.4

Net Income

$89.9

$90.8

Earnings Per Share (Basic)

Continuing operations

$0.77

$0.70

Discontinued operations

-

0.07

Total Earnings Per Share (Basic)

$0.77

$0.77

Earnings Per Share (Diluted)

Continuing operations

$0.76

$0.69

Discontinued operations

-

0.07

Total Earnings Per Share (Diluted)

$0.76

$0.76

Weighted Average Common

Shares Outstanding (Millions)

Basic

117.0

118.5

Diluted

118.3

120.2

Dividends Per Share of Common Stock

$0.22

$0.20

The accompanying Notes to Consolidated Condensed Financial Statements are an integral part

of these financial statements.

 

 



4

 

WISCONSIN ENERGY CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS

(Unaudited)

March 31, 2005

December 31, 2004

(Millions of Dollars)

Assets

Property, Plant and Equipment

In service

$8,230.2

$8,203.8

Accumulated depreciation

(3,139.6

)

(3,107.3

)

5,090.6

5,096.5

Construction work in progress

704.5

602.4

Leased facilities, net

97.5

98.9

Nuclear fuel, net

81.7

85.0

Net Property, Plant and Equipment

5,974.3

5,882.8

Investments

Nuclear decommissioning trust fund

729.0

737.8

Equity investment in transmission affiliate

190.2

187.8

Other

88.5

99.5

Total Investments

1,007.7

1,025.1

Current Assets

Cash and cash equivalents

18.5

35.6

Accounts receivable

465.9

349.0

Accrued revenues

188.0

245.1

Materials, supplies and inventories

209.5

407.4

Deferred income taxes - current

15.6

4.9

Assets held for sale

30.2

29.8

Other

104.7

132.2

Total Current Assets

1,032.4

1,204.0

Deferred Charges and Other Assets

Regulatory assets

860.6

849.4

Goodwill, net

441.9

441.9

Other

173.1

162.2

Total Deferred Charges and Other Assets

1,475.6

1,453.5

Total Assets

$9,490.0

$9,565.4

Capitalization and Liabilities

Capitalization

Common equity

$2,547.3

$2,492.4

Preferred stock of subsidiary

30.4

30.4

Long-term debt

3,230.5

3,239.5

Total Capitalization

5,808.2

5,762.3

Current Liabilities

Long-term debt due currently

100.0

101.0

Short-term debt

154.9

338.0

Accounts payable

259.1

309.7

Accrued liabilities

127.8

114.5

Other

166.4

129.2

Total Current Liabilities

808.2

992.4

Deferred Credits and Other Liabilities

Regulatory liabilities

919.9

922.4

Asset retirement obligations

765.6

762.2

Deferred income taxes - long-term

571.0

530.4

Other

617.1

595.7

Total Deferred Credits and Other Liabilities

2,873.6

2,810.7

Total Capitalization and Liabilities

$9,490.0

$9,565.4

The accompanying Notes to Consolidated Condensed Financial Statements are an

integral part of these financial statements.

 

 

 



5

 

 

 

WISCONSIN ENERGY CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

Three Months Ended March 31

2005

2004

(Millions of Dollars)

Operating Activities

Net income

$89.9

$90.8

Income from discontinued operations, net of tax

-

(7.4

)

Reconciliation to cash

Depreciation, decommissioning and amortization

88.5

88.0

Nuclear fuel expense amortization

6.8

6.7

Equity in earnings of unconsolidated affiliates

(8.9

)

(7.6

)

Distribution from unconsolidated affiliates

6.1

5.7

Deferred income taxes and investment tax credits, net

28.7

22.0

Accrued income taxes, net

6.6

10.5

Change in -

Accounts receivable and accrued revenues

(60.0

)

(45.2

)

Inventories

197.9

158.5

Other current assets

20.9

12.1

Accounts payable

(39.3

)

(34.3

)

Other current liabilities

50.5

78.5

Other

(10.8

)

13.4

Cash Provided by Operating Activities

376.9

391.7

Investing Activities

Capital expenditures

(168.8

)

(134.4

)

Proceeds from asset sales, net

6.7

3.2

Nuclear fuel

(3.8

)

(0.5

)

Nuclear decommissioning funding

(4.4

)

(4.4

)

Other

7.1

1.9

Cash Used in Investing Activities

(163.2

)

(134.2

)

Financing Activities

Issuance of common stock and exercise of stock options

18.9

19.6

Purchase of common stock

(29.8

)

(38.3

)

Dividends paid on common stock

(25.7

)

(23.7

)

Retirement and redemption of long-term debt

(11.1

)

(214.5

)

Change in short-term debt

(183.1

)

(10.9

)

Cash Used in Financing Activities

(230.8

)

(267.8

)

Change in Cash and Cash Equivalents from Continuing Operations

(17.1

)

(10.3

)

Cash and Cash Equivalents at Beginning of Period

35.6

28.1

Cash and Cash Equivalents at End of Period

$18.5

$17.8

Supplemental Information - Cash Paid For

Interest (net of amount capitalized)

$11.8

$21.3

Income taxes (net of refunds)

$15.4

$16.2