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SECURITIES AND EXCHANGE COMMISSION
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, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
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Commission |
Registrant; State of Incorporation; |
IRS Employer |
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1-11337 |
WPS RESOURCES CORPORATION |
39-1775292 |
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1-3016 |
WISCONSIN PUBLIC SERVICE CORPORATION |
39-0715160 |
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.
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WPS Resources Corporation |
Yes [x] No [ ] |
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Wisconsin Public Service Corporation |
Yes [x] No [ ] |
Indicate the number of shares outstanding of each of the issuers' classes of common stock, as of the latest practicable date:
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WPS RESOURCES CORPORATION |
Common stock, $1 par value, |
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WISCONSIN PUBLIC SERVICE CORPORATION |
Common stock, $4 par value, |
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WPS RESOURCES CORPORATION CONTENTS |
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Page |
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FORWARD-LOOKING STATEMENTS |
3 |
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PART I. |
FINANCIAL INFORMATION |
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Item 1. |
FINANCIAL STATEMENTS |
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WPS RESOURCES CORPORATION |
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Consolidated Statements of Income |
4 |
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Consolidated Balance Sheets |
5 |
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Consolidated Statements of Cash Flows |
6 |
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WISCONSIN PUBLIC SERVICE CORPORATION |
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Consolidated Statements of Income and |
7 |
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Consolidated Balance Sheets |
8 |
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Consolidated Statements of Capitalization |
9 |
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Consolidated Statements of Cash Flows |
10 |
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Consolidated Statements of Retained Earnings |
11 |
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CONDENSED NOTES TO FINANCIAL STATEMENTS OF |
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WPS Resources Corporation and Subsidiaries |
12-22 |
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Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations for |
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WPS Resources Corporation |
23-42 |
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Wisconsin Public Service Corporation |
43-49 |
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Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
50 |
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Item 4. |
Controls and Procedures |
51 |
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PART II. |
OTHER INFORMATION |
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Item 1. |
Legal Proceedings |
52-53 |
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Item 5. |
Other Information |
53-56 |
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Item 6. |
Exhibits and Reports on Form 8-K |
56 |
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Signatures |
57-62 |
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EXHIBIT INDEX |
63 |
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Forward-Looking Statements
Except for historical data and statements of current fact, the information contained or incorporated by reference in this document constitutes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Any references to plans, goals, beliefs or expectations in respect to future events and conditions or to estimates are forward-looking statements. Although we believe that statements of our expectations are based on reasonable assumptions, forward-looking statements are inherently uncertain and subject to risks and should be viewed with caution. Actual results or experience could differ materially from the forward-looking statements as a result of many factors. Forward-looking statements included or incorporated in this document include, but are not limited to statements regarding:
We cannot predict the course of future events or anticipate the interaction of multiple factors beyond our control and their effect on revenues, project timing, and costs. Some risk factors that could cause results different from any forward-looking statement include:
We make no commitment to disclose any revisions to the forward-looking statements as a result of facts, events or circumstances after the date of this report.
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PART I. FINANCIAL INFORMATION |
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Item 1. Financial Statements |
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WPS RESOURCES CORPORATION |
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CONSOLIDATED STATEMENTS OF INCOME (Unaudited) |
Three Months Ended |
Nine Months Ended |
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September 30 |
September 30 |
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(Millions, except share amounts) |
2002 |
2001 |
2002 |
2001 |
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Nonregulated revenue |
$361.9 |
$302.1 |
$1,102.1 |
$1,342.2 |
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Utility revenue |
247.7 |
215.0 |
758.3 |
749.5 |
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Total revenues |
609.6 |
517.1 |
1,860.4 |
2,091.7 |
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Nonregulated cost of fuel, gas, and purchased power |
335.1 |
284.6 |
1,028.7 |
1,301.4 |
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Utility cost of fuel, gas, and purchased power |
87.2 |
81.4 |
291.3 |
347.8 |
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Operating and maintenance expense |
103.9 |
84.3 |
321.3 |
262.3 |
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Depreciation and decommissioning expense |
23.8 |
21.2 |
72.5 |
60.8 |
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Taxes other than income |
10.0 |
8.6 |
29.9 |
26.5 |
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Operating income |
49.6 |
37.0 |
116.7 |
92.9 |
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Miscellaneous income |
11.0 |
6.6 |
34.1 |
13.4 |
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Interest expense |
(14.3) |
(14.0) |
(42.3) |
(41.8) |
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Distributions - preferred securities of subsidiary trust |
(0.9) |
(0.9) |
(2.6) |
(2.6) |
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Other expense |
(4.2) |
(8.3) |
(10.8) |
(31.0) |
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Income before taxes |
45.4 |
28.7 |
105.9 |
61.9 |
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Income tax provision |
14.1 |
6.1 |
23.4 |
2.6 |
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Net income before preferred dividends |
31.3 |
22.6 |
82.5 |
59.3 |
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Preferred stock dividends of subsidiary |
0.8 |
0.8 |
2.3 |
2.3 |
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Income available for common shareholders |
$ 30.5 |
$ 21.8 |
$ 80.2 |
$ 57.0 |
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Average shares of common stock |
31.9 |
28.7 |
31.7 |
27.9 |
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Earnings per common share |
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Basic |
$0.96 |
$0.76 |
$2.53 |
$2.04 |
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Diluted |
$0.95 |
$0.76 |
$2.52 |
$2.04 |
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Dividends per common share |
$0.535 |
$0.525 |
$1.585 |
$1.555 |
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The accompanying condensed notes are an integral part of these statements. |
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WPS RESOURCES CORPORATION |
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CONSOLIDATED BALANCE SHEETS (Unaudited) |
September 30 |
December 31 |
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(Millions) |
2002 |
2001 |
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Assets |
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Cash and cash equivalents |
$ 43.8 |
$ 43.9 |
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Restricted funds |
3.5 |
21.3 |
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Accounts receivable - net of reserves of $7.1 and $5.0, respectively |
234.0 |
248.0 |
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Accrued unbilled revenues |
29.4 |
56.5 |
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Inventories |
126.9 |
102.5 |
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Current assets from risk management activities |
366.0 |
336.0 |
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Other current assets |
75.6 |
61.5 |
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Current assets |
879.2 |
869.7 |
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Property, plant, and equipment - net
of reserves of $1,808.7 and |
1,585.2 |
1,463.6 |
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Regulatory assets |
63.3 |
91.0 |
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Long-term assets from risk management activities |
79.6 |
151.4 |
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Other |
286.7 |
294.3 |
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Total assets |
$2,894.0 |
$2,870.0 |
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Liabilities and Shareholders' Equity |
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Short-term debt |
$ 74.6 |
$ 46.2 |
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Current portion of long-term debt |
121.5 |
56.6 |
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Accounts payable |
312.8 |
334.6 |
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Current liabilities from risk management activities |
383.6 |
294.2 |
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Other current liabilities |
59.3 |
69.4 |
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Current liabilities |
951.8 |
801.0 |
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Long-term debt |
658.5 |
727.8 |
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Deferred income taxes |
83.1 |
69.5 |
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Deferred investment tax credits |
19.7 |
21.0 |
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Regulatory liabilities |
52.1 |
78.4 |
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Environmental remediation liabilities |
41.2 |
45.0 |
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Benefit obligations |
52.6 |
53.6 |
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Long-term liabilities from risk management activities |
76.3 |
145.7 |
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Other |
92.1 |
111.0 |
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Long-term liabilities |
1,075.6 |
1,252.0 |
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Commitments and contingencies |
- |
- |
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Company-obligated mandatorily redeemable trust preferred |
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securities of subsidiary trust holding solely |
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WPS Resources 7.00% subordinated debentures |
50.0 |
50.0 |
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Preferred stock of subsidiary with no mandatory redemption |
51.1 |
51.1 |
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Common stock equity |
765.5 |
715.9 |
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Total liabilities and shareholders' equity |
$2,894.0 |
$2,870.0 |
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The accompanying condensed notes are an integral part of these statements. |
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WPS RESOURCES CORPORATION |
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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
Nine Months Ended |
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September 30 |
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(Millions) |
2002 |
2001 |
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Operating Activities |
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Net income before preferred dividends |
$ 82.5 |
$ 59.3 |
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Adjustments to reconcile net income to net cash provided by operating activities |
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Depreciation and decommissioning |
72.5 |
60.8 |
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Gain on nuclear decommissioning trust |
(1.0) |
(3.1) |
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Deferred income taxes and investment tax credit |
15.0 |
(7.7) |
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Unrealized gains and losses on nonregulated energy contracts |
9.1 |
(1.8) |
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Other |
21.8 |
16.6 |
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Changes in working capital |
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Receivables |
12.9 |
139.6 |
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Inventories |
6.7 |
(27.4) |
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Other current assets |
12.3 |
63.1 |
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Accounts payable |
(25.2) |
(125.2) |
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Other current liabilities |
(9.2) |
(8.0) |
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Net cash operating activities |
197.4 |
166.2 |
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Investing Activities |
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Capital expenditures |
(205.8) |
(184.5) |
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Return of capital from equity method investment |
- |
42.3 |
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Dividends received from equity method investment |
5.4 |
- |
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Sale of assets |
0.3 |
0.1 |
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Decommissioning funding |
(2.0) |
(2.0) |
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Other |
(16.3) |
(27.8) |
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Net cash investing activities |
(218.4) |
(171.9) |
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Financing Activities |
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Short-term debt - net |
46.1 |
(50.2) |
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Issuance of long-term debt |
- |
180.2 |
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Repayment of long-term debt and capital lease |
(4.4) |
(61.0) |
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Payment of dividends |
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Preferred stock |
(2.3) |
(2.3) |
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Common stock |
(50.1) |
(43.2) |
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Issuance of common stock |
23.6 |
13.9 |
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Purchase of common stock |
(1.2) |
(0.7) |
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Other |
9.2 |
(16.6) |
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Net cash financing activities |
20.9 |
20.1 |
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Change in cash and cash equivalents |
(0.1) |
14.4 |
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Cash and cash equivalents at beginning of period |
43.9 |
12.8 |
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Cash and cash equivalents at end of period |
$ 43.8 |
$ 27.2 |
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The accompanying condensed notes are an integral part of these statements. |
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WISCONSIN PUBLIC SERVICE CORPORATION |
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CONSOLIDATED STATEMENTS OF INCOME |
Three Months Ended |
Nine Months Ended |
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AND COMPREHENSIVE INCOME (Unaudited) |
September 30 |
September 30 |
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(Millions) |
2002 |
2001 |
2002 |
2001 |
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Operating revenues |
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Electric |
$197.1 |
$168.9 |
$522.3 |
$467.0 |
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Gas |
39.5 |
35.3 |
205.1 |
249.4 |
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Total operating revenues |
236.6 |
204.2 |
727.4 |
716.4 |
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Operating expenses |
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Electric production fuels |
36.8 |
33.2 |
92.9 |
93.8 |
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Purchased power |
26.9 |
28.3 |
69.8 |
69.9 |
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Gas purchased for resale |
22.6 |
19.9 |
126.5 |
184.2 |
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Other operating expenses |
60.0 |
43.3 |
184.1 |
141.8 |
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Maintenance |
15.1 |
15.9 |
53.9 |
48.1 |
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Depreciation and decommissioning |
19.4 |
18.0 |
60.9 |
50.5 |
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Federal income taxes |
10.1 |
10.6 |
26.0 |
27.7 |
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Investment tax credit restored |
(0.4) |
(0.4) |
(1.2) |
(1.2) |
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State income taxes |
3.6 |
2.5 |
7.3 |
6.3 |
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Gross receipts tax and other |
8.3 |
7.6 |
25.1 |
23.3 |
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Total operating expenses |
202.4 |
178.9 |
645.3 |
644.4 |
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Operating income |
34.2 |
25.3 |
82.1 |
72.0 |
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Other income and (deductions) |
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Allowance for equity funds used during construction |
0.8 |
0.3 |
2.2 |
1.2 |
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Other, net |
4.2 |
4.8 |
11.4 |
12.5 |
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Income taxes |
(1.5) |
(0.2) |
(3.7) |
(1.5) |
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Total other income |
3.5 |
4.9 |
9.9 |
12.2 |
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Income before interest expense |
37.7 |
30.2 |
92.0 |
84.2 |
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Interest expense |
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Interest on long-term debt |
6.9 |
6.2 |
20.9 |
17.1 |
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Other interest |
2.0 |
2.3 |
5.8 |
7.3 |
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Allowance for borrowed funds used during construction |
(0.3) |
(0.5) |
(0.9) |
(1.5) |
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Total interest expense |
8.6 |
8.0 |
25.8 |
22.9 |
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Minority interest |
(0.4) |
(0.5) |
(1.2) |
(0.5) |
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Net income |
28.7 |
21.7 |
65.0 |
60.8 |
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Preferred stock dividend requirements |
0.8 |
0.8 |
2.3 |
2.3 |
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Earnings on common stock |
27.9 |
20.9 |
62.7 |
58.5 |
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Other comprehensive income |
- |
- |
- |
- |
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Comprehensive income |
$ 27.9 |
$ 20.9 |
$ 62.7 |
$ 58.5 |
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The accompanying condensed notes are an integral part of these statements. |
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WISCONSIN PUBLIC SERVICE CORPORATION |
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CONSOLIDATED BALANCE SHEETS (Unaudited) |
September 30 |
December 31 |
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(Millions) |
2002 |
2001 |
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ASSETS |
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Utility plant |
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Electric |
$1,811.0 |
$1,748.5 |
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Gas |
418.7 |
392.6 |
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Property under capital lease |
74.1 |
74.1 |
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Total |
2,303.8 |
2,215.2 |
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Less - Accumulated depreciation and decommissioning |
1,447.3 |
1,419.0 |
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Total |
856.5 |
796.2 |
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Nuclear decommissioning trusts |
281.0 |
311.3 |
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Construction in progress |
88.3 |
53.9 |
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Nuclear fuel, less accumulated amortization |
18.9 |
24.9 |
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Net utility plant |
1,244.7 |
1,186.3 |
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Current assets |
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Cash and cash equivalents |
18.0 |
9.9 |
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Customer and other receivables, net of reserves of $3.5 for both periods |
83.8 |
85.7 |
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Accrued utility revenues |
20.0 |
40.9 |
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Fossil fuel, at average cost |
14.1 |
15.1 |
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Gas in storage, at average cost |
30.4 |
33.6 |
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Materials and supplies, at average cost |
24.9 |
23.7 |
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Assets from risk management |
2.6 |
5.0 |
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Prepayments and other |
34.7 |
24.3 |
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Total current assets |
228.5 |
238.2 |
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Regulatory assets |
61.4 |
89.0 |
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Pension assets |
84.2 |
84.3 |
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Goodwill |
35.5 |
35.4 |
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Investments and other assets |
90.6 |
97.7 |
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Total |
$1,744.9 |
$1,730.9 |
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CAPITALIZATION AND LIABILITIES |
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Capitalization |
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Common stock equity |
$ 742.3 |
$ 710.6 |
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Preferred stock with no mandatory redemption |
51.2 |
51.2 |
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Capital lease obligation |
71.5 |
72.1 |
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Long-term debt to parent |
12.9 |
13.1 |
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Long-term debt |
280.3 |
330.4 |
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Total capitalization |
1,158.2 |
1,177.4 |
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Current liabilities |
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Current portion of long-term debt and capital lease obligation |
100.9 |
50.9 |
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Note payable |
10.0 |
10.0 |
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Accounts payable |
78.1 |
73.0 |
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Accrued interest and taxes |
8.9 |
20.0 |
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Other |
23.5 |
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