UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):
April 27, 2000
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WISCONSIN ELECTRIC POWER COMPANY
(Exact Name of registrant as specified in its charter)
001-01245
(Commission file number)
Wisconsin 39-0476280
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
231 West Michigan Street; P.O. Box 2046; Milwaukee, Wisconsin 53201
(Address of principal executive offices) (Zip Code)
(414) 221-2345
(Registrant's telephone number, including area code)
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
FORM 8-K
WISCONSIN ELECTRIC POWER COMPANY
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ITEM 5. OTHER EVENTS
SECURITIES RATINGS
At the end of April 2000, in conjunction with
consummation of Wisconsin Energy Corporation's
("Wisconsin Energy") acquisition of WICOR, Inc.,
Moody's Investors Service ("Moody's") maintained its
credit ratings of the securities of Wisconsin Electric
Power Company, a wholly owned subsidiary of Wisconsin
Energy ("Wisconsin Electric"). Duff & Phelps Inc.
("D&P") reaffirmed its short-term rating of Wisconsin
Electric, but downgraded its long-term credit ratings
of Wisconsin Electric. Fitch Investors Service
("Fitch") assigned initial credit ratings for Wisconsin
Electric commercial paper and reaffirmed its long-term
ratings of Wisconsin Electric. Also at the end of
April 2000, Standard & Poors Corporation ("S&P")
lowered its long-term ratings but reaffirmed its short-
term ratings of Wisconsin Electric. In conjunction
with its rating adjustments at the end of April 2000,
S&P removed all long-term ratings on Wisconsin Energy
and its subsidiaries from credit watch with negative
implications, assigning a negative outlook. The
following table summarizes various current ratings of
Wisconsin Electric's securities by S&P, Moody's, D&P
and Fitch.
S & P Moody's D & P Fitch
--------- --------- --------- ---------
Wisconsin Electric Power Company
Commercial Paper A-1+ P-1 D-1+ F-1+
Senior Secured Debt AA- Aa2 AA AA
Unsecured Debt A+ Aa3 AA- AA-
Preferred Stock A aa3 AA- AA-
GIDDINGS & LEWIS, INC./CITY OF WEST ALLIS LAWSUIT
In July 1996, Giddings & Lewis, Inc., Kearney &
Trecker Corporation, now a part of Giddings & Lewis,
Inc., and the City of West Allis brought an action in
the Milwaukee County Circuit Court alleging that
Wisconsin Electric had deposited cyanide contaminated
wood chips in 1959 at two sites in West Allis,
Wisconsin owned by the plaintiffs. Environmental
remediation at both sites was completed several years
ago, with the current owners paying for disposal of
materials found on their respective portions of the
sites. Internal investigations led Wisconsin Electric
to believe that it was not the source of this waste.
In July 1999, a jury issued a verdict against
Wisconsin Electric awarding the plaintiffs $4.5 million
in compensatory damages for clean-up costs and loss of
property value and $100 million in punitive damages.
In October 1999, the Circuit Court denied Wisconsin
Electric's post trial motions and directed that
judgment on the verdict be entered. Wisconsin Electric
has filed notice of appeal of the judgment to the
Wisconsin Court of Appeals.
In December 1999, in order to stop the post-
judgment accrual of interest at 12% during the pendency
of the appeal, Wisconsin Electric tendered a contested
liability payment of $110 million, which is part of
Deferred Charges and Other Assets - Other on the
Consolidated Balance Sheet, to the Milwaukee County
Clerk of Circuit Court representing the amount of the
verdict and accrued interest. Under Wisconsin law, the
plaintiffs are liable to Wisconsin Electric upon
reversal or reduction of the judgment for the
applicable amount of the funds tendered with interest.
In further post-trial proceedings, the plaintiffs
filed with the Circuit Court a motion for sanctions
based upon representations made by Wisconsin Electric
during trial that Wisconsin Electric had no insurance
coverage for the punitive damage award. The Circuit
Court held hearings on the sanctions issue in February
2000. On April 27, 2000, the Circuit Court Judge
issued her ruling on the sanctions matter relating to
the Giddings & Lewis / City of West Allis lawsuit. The
Judge imposed the following sanctions against Wisconsin
Electric: (i) "Judgment in the alternative" as a
sanction, thereby finding an alternative basis upon
which to sustain the $104.5 million verdict returned by
the jury; (ii) a bar against Wisconsin Electric
pursuing insurance coverage for the punitive damage
portion of the verdict; and (iii) a requirement that
Wisconsin Electric pay the plaintiffs' costs relating
to the sanctions matter. In addition to its appeal of
the judgment entered on the jury's verdict, Wisconsin
Electric will also appeal the Judge's ruling on the
sanctions matter.
In the opinion of management, based in part on the
advice of legal counsel, the jury verdict was not
supported by the evidence or the law and the
unprecedented award of punitive damages of this
magnitude was unwarranted and should therefore be
reversed or substantially reduced on appeal.
Management also believes that the sanctions imposed by
the Judge were not supported by the evidence or the
law. As such, Wisconsin Electric has not established a
reserve for potential damages from this suit.
FORM 8-K
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
WISCONSIN ELECTRIC POWER COMPANY
(Registrant)
/s/Calvin H. Baker
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Date: April 28, 2000 Calvin H. Baker, Vice President -
Finance and Chief Financial Officer