1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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, 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 1-1245
WISCONSIN ELECTRIC POWER COMPANY
(Exact name of registrant as specified in its charter)
Wisconsin 39-0476280
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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)
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 the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at November 1, 1995
-------------------------- -------------------------------
$10 Par Value Common Stock 33,289,327 Shares
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FORM 10-Q
WISCONSIN ELECTRIC POWER COMPANY
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WISCONSIN ELECTRIC POWER COMPANY
CONDENSED INCOME STATEMENT
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
-------------------- --------------------
1995 1994 1995 1994
------ ------ ------ ------
(Thousands of Dollars)
Operating Revenues
Electric $385,725 $361,735 $1,076,921 $1,056,249
Steam 1,262 1,214 10,006 10,640
-------- -------- --------- --------
Total Operating Revenues 386,987 362,949 1,086,927 1,066,889
Operating Expenses
Fuel 89,179 73,061 228,609 217,022
Purchased power 5,521 11,722 32,727 33,356
Other operation expenses 90,069 85,249 258,781 262,993
Maintenance 22,034 28,049 78,734 88,681
Revitalization - - - 63,500
Depreciation 42,291 40,680 123,683 119,740
Taxes other than income taxes 17,775 17,000 51,363 54,081
Federal income tax 33,306 25,911 78,499 62,194
State income tax 7,712 6,014 18,369 14,623
Deferred income taxes - net (2,750) 1,928 (1,344) (12,566)
Investment tax credit - net (1,010) (1,021) (3,029) (3,061)
-------- -------- -------- --------
Total Operating Expenses 304,127 288,593 866,392 900,563
Operating Income 82,860 74,356 220,535 166,326
Other Income and Deductions
Interest income 3,995 3,117 9,464 8,645
Allowance for other funds used
during construction 1,020 1,358 2,674 4,119
Miscellaneous - net 2,176 2,254 7,630 6,275
Income taxes (589) (531) (1,649) (1,255)
-------- -------- -------- --------
Total Other Income and Deductions 6,602 6,198 18,119 17,784
Income Before Interest Charges 89,462 80,554 238,654 184,110
Interest Charges
Interest expense 26,171 25,210 78,530 75,623
Allowance for borrowed funds used
during construction (576) (767) (1,510) (2,327)
-------- -------- -------- --------
Total Interest Charges 25,595 24,443 77,020 73,296
-------- -------- -------- --------
Net Income 63,867 56,111 161,634 110,814
Preferred Stock Dividend Requirement 300 301 902 1,050
-------- -------- -------- --------
Earnings Available for Common Stockholder $ 63,567 $ 55,810 $160,732 $109,764
======== ======== ======== ========
<FN>
Note - Earnings and dividends per share of common stock are not applicable because
all of the company's common stock is owned by Wisconsin Energy Corporation.
See accompanying notes to financial statements.
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WISCONSIN ELECTRIC POWER COMPANY FORM 10-Q
CONDENSED BALANCE SHEET
(Unaudited)
September 30, 1995 December 31, 1994
------------------ -----------------
(Thousands of Dollars)
Assets
------
Utility Plant
Electric $4,495,690 $4,304,925
Steam 39,937 40,103
Accumulated provision for depreciation (2,024,680) (1,914,277)
---------- ----------
2,510,947 2,430,751
Construction work in progress 65,470 205,343
Nuclear fuel - net 52,676 56,606
---------- ----------
Net Utility Plant 2,629,093 2,692,700
Other Property and Investments 419,785 395,924
Current Assets
Cash and cash equivalents 13,041 5,002
Accounts receivable 114,951 90,105
Accrued utility revenues 80,295 95,051
Materials, supplies and fossil fuel 131,191 125,733
Prepayments and other assets 54,661 63,211
---------- ----------
Total Current Assets 394,139 379,102
---------- ----------
Deferred Charges and Other Assets
Accumulated deferred income taxes 118,859 119,132
Other 308,414 239,271
---------- ----------
Total Deferred Charges and Other Assets 427,273 358,403
---------- ----------
Total Assets $3,870,290 $3,826,129
========== ==========
Capitalization and Liabilities
------------------------------
Capitalization
Common stock $ 532,566 $ 502,566
Retained earnings 1,001,826 951,988
---------- ----------
Total Common Stock Equity 1,534,392 1,454,554
Preferred stock - redemption not required 30,451 30,451
Long-term debt 1,157,682 1,191,257
---------- ----------
Total Capitalization 2,722,525 2,676,262
Current Liabilities
Long-term debt due currently 50,828 19,846
Short-term debt 155,181 187,027
Accounts payable 60,326 67,444
Accrued liabilities 52,650 58,037
Other 27,853 18,761
---------- ----------
Total Current Liabilities 346,838 351,115
Deferred Credits and Other Liabilities
Accumulated deferred income taxes 447,384 440,564
Other 353,543 358,188
---------- ----------
Total Deferred Credits and Other Liabilities 800,927 798,752
---------- ----------
Total Capitalization and Liabilities $3,870,290 $3,826,129
========== ==========
<FN>
See accompanying notes to financial statements.
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FORM 10-Q
WISCONSIN ELECTRIC POWER COMPANY
STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30
------------------------------
1995 1994
---- ----
(Thousands of Dollars)
Operating Activities:
Net income $161,634 $110,814
Reconciliation to cash:
Depreciation 123,683 119,740
Nuclear fuel expense - amortization 17,745 16,775
Conservation expense - amortization 16,114 17,705
Debt premium, discount & expense - amortization 8,549 10,477
Revitalization - net (4,004) 46,890
Deferred income taxes - net (1,344) (12,566)
Investment tax credit - net (3,029) (3,061)
Allowance for other funds used during construction (2,674) (4,119)
Change in: Accounts receivable (24,846) 6,082
Inventories (5,458) 1,638
Accounts payable (7,118) (15,107)
Other current assets 23,306 2,912
Other current liabilities 3,705 1,668
Other 2,136 (5,663)
-------- --------
Cash Provided by Operating Activities 308,399 294,185
Investing Activities:
Construction expenditures (154,023) (172,316)
Allowance for borrowed funds used during construction (1,510) (2,327)
Nuclear fuel (15,097) (18,809)
Nuclear decommissioning trust (8,172) (7,732)
Conservation investments - net 2,362 (11,333)
Other (4,893) (8,407)
-------- --------
Cash Used in Investing Activities (181,333) (220,924)
Financing Activities:
Sale of long-term debt 108,941 11,079
Retirement of long-term debt (114,325) (15,614)
Change in short-term debt (31,846) 25,323
Stockholder contribution 30,000 30,000
Retirement of preferred stock - (5,250)
Dividends on stock - common (110,895) (104,867)
- preferred (902) (1,079)
-------- --------
Cash Used in Financing Activities (119,027) (60,408)
-------- --------
Change in Cash and Cash Equivalents $ 8,039 $ 12,853
======== ========
Supplemental Information Disclosures:
Cash Paid for:
Interest (net of amount capitalized) $ 72,773 $ 65,385
Income taxes 96,328 102,750
<FN>
See accompanying notes to financial statements.
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FORM 10-Q
WISCONSIN ELECTRIC POWER COMPANY
----------------------------------
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. The accompanying unaudited financial statements should be read in
conjunction with the company's 1994 Annual Report on Form 10-K. In the
opinion of management, all adjustments, normal and recurring in nature,
necessary to a fair statement of the results of operations and
financial position of the company have been included in the accompanying
income statement and balance sheet. The results of operations for the
three months and nine months ended September 30, 1995 are not, however,
necessarily indicative of the results which may be expected for the year
1995 because of seasonal and other factors.
2. On April 28, 1995, Wisconsin Energy Corporation ("WEC"), Wisconsin
Electric Power Company's ("WE") parent company, and Northern States Power
Company, Minnesota ("NSP") entered into an Agreement and Plan of Merger,
which was amended and restated as of July 26, 1995 ("Merger Agreement").
The Merger Agreement provides for a strategic business combination
involving NSP and WEC in a "merger-of-equals" transaction. As a result, a
registered utility holding company, which will be known as Primergy
Corporation ("Primergy"), will be the parent of NSP and the current
operating subsidiaries of NSP and WEC. The business combination is
intended to be tax-free for income tax purposes and to be accounted for as
a "pooling of interests".
The Merger Agreement is subject to various conditions, including the
approval of various regulatory agencies. On July 10, 1995 WEC and NSP
filed an application and supporting testimony with the Federal Energy
Regulatory Commission seeking approval of the proposed merger. Similar
filings were made on August 4, 1995 with regulatory agencies in the states
where WEC and NSP provide utility services and in which such filings are
required. On September 13, 1995, the stockholders of WEC and NSP voted,
in their respective stockholder meetings, to approve the Merger Agreement
and certain other related matters. Applications for license amendments
and approvals relating to the proposed merger were filed with the Nuclear
Regulatory Commission in late October 195. Subject to obtaining all
requisite approvals, WEC and NSP anticipate completing this business
combination late in 1996. ITEM 5. OTHER INFORMATION - MERGER AGREEMENT
WITH NORTHERN STATES POWER COMPANY in Part II of this reports contain
further information concerning the proposed transaction.
3. WEC intends to merge Wisconsin Natural Gas Company into WE to form a
single combined utility subsidiary. All required regulatory approvals for
the merger have been received. Completion of the planned merger is
expected to occur by January 1, 1996.
4. In September and October 1995, the company issued $98,350,000 of unsecured
variable rate promissory notes maturing between March 1, 2006 and
September 1, 2030. These notes were issued as a revenue and collateral
source for an equal principal amount of tax exempt Refunding Revenue Bonds
issued on the company's behalf. Proceeds from the promissory notes were
used to refund various issues of the company's First Mortgage Bonds
totaling $98,350,000 that were called for optional redemption.
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FORM 10-Q
WISCONSIN ELECTRIC POWER COMPANY
----------------------------------
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Wisconsin Energy Corporation ("WEC"), the parent company of Wisconsin Electric
Power Company ("WE"), has entered into an agreement with Northern States Power
Company ("NSP") which provides for a strategic business combination involving
WEC and NSP in a "merger-of-equals" transaction. Further information
concerning such agreement and proposed transaction is included in ITEM 5.
OTHER INFORMATION - MERGER AGREEMENT WITH NORTHERN STATES POWER COMPANY in
Part II of this report.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by WE's operating activities totaled $308 million during the
nine months ended September 30, 1995. This compares to $294 million provided
during the same period in 1994.
WE's investing activities totaled $181 million for the nine months ended
September 30, 1995 compared to approximately $221 million during the same
period in 1994. Investments during the first nine months of 1995 include $154
million for the construction of new or improved facilities, $15 million for
acquisition of nuclear fuel, and $8 million for payments to an external trust
for the eventual decommissioning of WE's Point Beach Nuclear Plant.
On August 29, 1995, WE called for optional redemption $98.35 million aggregate
principal amount of fixed rate tax exempt bonds issued by three political
jurisdictions on WE's behalf that were secured by issues of WE's First
Mortgage Bonds with terms corresponding to the tax exempt bonds called for
redemption. During September and October 1995, the three political
jurisdictions issued $98.35 million aggregate principal amount of new tax
exempt bonds on behalf of WE, collateralized by unsecured variable rate
promissory notes issued by WE with terms corresponding to the respective
issues of the refunding tax exempt bonds, the proceeds of which were used to
finance such optional redemptions. The WE First Mortgage Bonds, which
collateralized the redeemed tax exempt bonds, have also been canceled.
Capital requirements for the remainder of 1995 are expected to be principally
for construction expenditures, purchase of nuclear fuel, and payments to the
external trust for the eventual decommissioning of the Point Beach Nuclear
Plant. Depending upon market conditions and other factors, WE may issue
approximately $100 million of additional intermediate or long-term debt in a
public offering before the end of 1995.
RESULTS OF OPERATIONS
Third Quarter Results:
Net income increased 13.8% or by approximately $7.8 million during the third
quarter of 1995 compared to the same period in 1994. Primarily due to warmer
weather in the third quarter, electric revenues rose 6.6% and kilowatt-hour
sales increased 6.2%. Gross margin (operating revenues less fuel and
purchased power) increased 5.1%. Maintenance expenses were 21.4% lower for
the quarter due in part to increased efficiencies gained through WE's
revitalization program.
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FORM 10-Q
WISCONSIN ELECTRIC POWER COMPANY
----------------------------------
PART I - FINANCIAL INFORMATION (Cont'd)
RESULTS OF OPERATIONS - Cont'd
The annualized $16,179,000 or 1.3% Wisconsin retail electric fuel adjustment
rate decrease that became effective on August 4, 1994 for WE customers remains
effective in 1995.
ELECTRIC SALES
Three Months Ended September 30
-------------------------------
Electric Sales - Megawatt Hours 1995 1994 % Change
- ------------------------------- ---------- ---------- --------
Residential 1,919,726 1,699,442 13.0
Small Commercial and Industrial 1,883,412 1,721,476 9.4
Large Commercial and Industrial 2,872,876 2,803,350 2.5
Other 412,772 382,146 8.0
---------- ----------
Total Retail and Municipal 7,088,786 6,606,414 7.3
Resale-Utilities 320,764 368,341 (12.9)
---------- ----------
Total Sales 7,409,550 6,974,755 6.2
- -------------------------------
Total electric kilowatt-hour sales during the third quarter of 1995 were
positively impacted by, among other things, substantially warmer weather
conditions compared to 1994. As measured by cooling degree days, the quarter
was 17.2% warmer than the same period in 1994. Electric energy sales to the
Empire and Tilden iron ore mines, WE's two largest customers, decreased 2.2%
during the three months ended September 30, 1995 compared to the three months
ended September 30, 1994. Excluding the mines, total electric sales increased
6.9% and sales to the remaining large commercial and industrial customers
increased 3.5%.
For additional information regarding matters pertaining to electric
operations, refer to ITEM 1. BUSINESS - ELECTRIC UTILITY OPERATIONS in PART I
of WE's Annual Report on Form 10-K for the year ended December 31, 1994.
Year-to-Date Results:
Net income increased approximately $51 million or 45.9% during the nine months
ended September 30, 1995 compared to the same period in 1994, reflecting a
non-recurring charge in the first quarter of 1994 of approximately $39 million
(net of tax) associated with WE's restructuring program. This charge included
the cost of severance and early retirement packages, elements of a
"revitalization" program designed to better position WE in a changing market
place. It is anticipated that this change will be offset by the end of 1995
through savings in operation and maintenance costs. Excluding the non-
recurring charge in 1994, net income increased approximately $12 million or
8.0% during the nine month period ended September 30, 1995 compared to the
same period in 1994.
During the first nine months of 1995 compared to the first nine months of
1994, total electric revenues increased 2% as a result of a 1.2% increase in
kilowatt-hour sales. Gross margin (operating revenues less fuel and purchased
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FORM 10-Q
WISCONSIN ELECTRIC POWER COMPANY
----------------------------------
PART I - FINANCIAL INFORMATION (Cont'd)
RESULTS OF OPERATIONS - Cont'd
power) increased 1.2%. In the first nine months of 1995, other operation and
maintenance expenses decreased 4% compared to the first nine months of 1994,
reflecting among other things the effects of WE's "revitalization" program.
ELECTRIC SALES
Nine Months Ended September 30
------------------------------
Electric Sales - Megawatt Hours 1995 1994 % Change
- ------------------------------- ---------- ---------- --------
Residential 5,218,854 4,967,637 5.1
Small Commercial and Industrial 5,300,266 5,040,837 5.1
Large Commercial and Industrial 8,060,228 7,877,608 2.3
Other 1,169,807 1,218,405 (4.0)
---------- ----------
Total Retail and Municipal 19,749,155 19,104,487 3.4
Resale-Utilities 762,954 1,168,490 (34.7)
---------- ----------
Total Sales 20,512,109 20,272,977 1.2
- -------------------------------
Total electric kilowatt-hour sales during the first nine months of 1995 were
positively impacted by, among other things, warmer weather conditions during
the summer of 1995. However, this was somewhat offset by mild winter weather
in the first quarter of 1995. As measured by cooling degree days, the first
three quarters of 1995 were 9.5% warmer compared to the same period in 1994.
As measured by heating degree days, however, the first quarter of 1995 was
14.7% warmer compared to 1994.
Electric energy sales to the Empire and Tilden iron ore mines decreased 1.4%
during the nine months ended September 30, 1995 compared to the same period in
1994. Excluding the mines, total electric sales increased 1.4% and sales to
the remaining large commercial and industrial customers increased 3.4%.
For certain other information which may impact WE's future financial condition
or results of operations, see ITEM 1. LEGAL PROCEEDINGS and ITEM 5. OTHER
INFORMATION in Part II of this report.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The following information should be read in conjunction with ITEM 3. LEGAL
PROCEEDINGS in PART I of Wisconsin Electric Power Company's ("WE") Annual
Report on Form 10-K for the year ended December 31, 1994 and ITEM 1. LEGAL
PROCEEDINGS in Part II of WE's Quarterly Reports on Form 10-Q for the periods
ended March 31, 1995 and June 30, 1995.
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FORM 10-Q
WISCONSIN ELECTRIC POWER COMPANY
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PART II - OTHER INFORMATION (Cont'd)
ITEM 1. LEGAL PROCEEDINGS (Cont'd)
WISCONSIN RETAIL RATE MATTERS
1996 Test Year: On May 1, 1995, WE and WN filed with the PSCW required data
related to the 1996 test year. This was an abbreviated filing since no
increase in rates was requested. At the PSCW's open meeting on August 21,
1995, the PSCW determined that the electric, gas and steam rates for 1996
should be decreased from current levels. The dollar impacts and percentage
decreases for electric, gas and steam rates are approximately $33 million
(2.75%), $8 million (2.6%) and approximately $0.8 million (5.1%),
respectively, on an annualized basis. In its letter dated September 11, 1995,
the PSCW directed that the rate decreases be implemented effective January 1,
1996.
1997 Test Year: In its letter dated September 11, 1995, the PSCW instructed
WE and WN to file in January 1996 specific financial data related to the 1997
test year. The PSCW has determined that it will need a full review of WE and
WN's rates for the 1997 test year in connection with the consideration of the
application for approval of the proposed merger of WEC and NSP. Further
information concerning the proposed merger is included in ITEM 5. OTHER
INFORMATION in Part II of this report.
DRY CASK STORAGE MATTER
On August 24, 1995, the Citizens' Utility Board ("CUB"), a consumer advocacy
group, and other parties mailed to WE and the Wisconsin Department of Natural
Resources ("WDNR") a formal "Notice of Intent to Sue" stating that they would
commence a citizens suit premised on an alleged failure of WE to obtain WDNR
approval under Wisconsin's "radioactive waste site exploration" law prior to
doing soil test borings in connection with its dry cask storage facility at
Point Beach Nuclear Plant. If such a suit is commenced, WE would vigorously
defend, taking the position that this law is not applicable to the activities
in question. See ITEM 5. OTHER INFORMATION - DRY CASK STORAGE PROJECT below
for further information concerning the dry cask storage facility.
ENVIRONMENTAL COMPLIANCE
Marina Cliffs Barrel Dump Site: The Environmental Protection Agency ("EPA")
has identified WE as a potentially responsible party ("PRP") at the Marina
Cliffs Barrel Dump Site (Northwestern Barrel) in South Milwaukee, Wisconsin.
This site is a former commercial barrel recycling facility which cleaned,
reconditioned and sold used barrels. WE is alleged to have sent empty barrels
to this facility. The Company has joined a recently created PRP group which
has been formed to remediate the site. WE has no reason to believe that it is
responsible for the contamination at this site.
Lauer Landfill: Waste Management, Wisconsin a successor owner of the Lauer
Landfill, a private sanitary landfill in Milwaukee, Wisconsin, has undertaken
the private remediation of contamination allegedly emanating therefrom. Waste
Management, Wisconsin has written to WE indicating that it anticipates,
because WE was, according to Waste Management, Wisconsin records, a user of
that landfill, that it will seek recovery of a portion of its remediation
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FORM 10-Q
WISCONSIN ELECTRIC POWER COMPANY
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PART II - OTHER INFORMATION (Cont'd)
ENVIRONMENTAL COMPLIANCE - Cont'd
costs from WE. WE has not yet met with Waste Management, Wisconsin regarding
this matter.
Manistique River/Harbor Area: In 1993-94, WE received three requests for
information or PRP letters from the EPA regarding the disposition of company
transformers and capacitors from the company's prior operations in the area,
as well as WE's financial status. The EPA states that the area, which is
located in the upper peninsula of Michigan, has PCB contamination. WE
recently became aware that, in 1974, three oil-filled transformers were sold
to a local junk/salvage dealer. WE has no reason to believe that the company
is responsible in total or in part for the PCB contamination in the Manistique
River/Harbor area. WE has learned, through other sources, that the EPA and
two PRPs (Edison Sault Electric Company and Manistique Papers) have reached an
agreement that provides for capping the harbor, which should remedy the
situation in whole or in part.
ITEM 5. OTHER INFORMATION
POINT BEACH UNIT 2 STEAM GENERATORS
In October 1992, WE filed an application with the PSCW for the replacement in
the fall of 1996 of the Unit 2 steam generators at Point Beach Nuclear Plant.
This would allow for the unit's operation until the expiration of its
operating license in 2013. Without the replacement of the steam generators,
it is believed that the unit would not be able to operate to the end of its
current license. The PSCW has deferred a decision on the steam generator
replacements in part to gather more information during the refueling outage in
the fall of 1995. It is anticipated that the final order in this matter will
be issued in early 1996.
During the October 1995 Unit 2 refueling outage, inspections of the steam
generators indicated that corrosion has continued to degrade some of the
internal components, which had reduced the plant's power capability. Prior to
the current outage, degraded tubes in the steam generators had reduced the
output of the 500 megawatt unit by 10 to 15 megawatts. Plugging the degraded
tubes identified in this most recent inspection would additionally reduce
output of Unit 2. WE is evaluating appropriate operating parameters for the
unit, which will determine future maximum output levels. WE does not expect
output to be reduced to less than 75% of rated capacity. WE is currently
exploring repair options and is discussing them with the Nuclear Regulatory
Commission ("NRC"). Return to service will require NRC approvals for a change
to the plant technical specifications regarding reactor flow and the selected
repair option. WE expects to make repairs and return Unit 2 to service by
late November or early December 1995.
DRY CASK STORAGE PROJECT
In November 1991, WE filed an application with the PSCW for authority to
construct and operate an Independent Spent Fuel Storage Installation
("ISFSI"). The ISFSI will provide interim dry cask storage of spent fuel from
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FORM 10-Q
WISCONSIN ELECTRIC POWER COMPANY
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PART II - OTHER INFORMATION (Cont'd)
DRY CASK STORAGE PROJECT (Cont'd)
Point Beach. Public hearings on the proposed project were held during October
1994. On February 13, 1995, WE received a Certificate of Authority from the
PSCW to construct and operate the ISFSI. Construction was completed in
October 1995. WE expects to begin loading the first storage casks in December
1995. See ITEM 1. BUSINESS - SOURCES OF GENERATION - NUCLEAR - "Spent Fuel
Storage and Disposal" and ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - "Capital Requirements 1995-
1999" in WE's Annual Report on Form 10-K for the year ended December 31, 1994
for further information concerning the PSCW's approval of WE's application to
utilize dry cask storage for spent nuclear fuel generated at Point Beach, the
need for such dry storage facility, and pending petitions for judicial review
of the PSCW's decision.
PSCW ELECTRIC UTILITY INDUSTRY INVESTIGATION
The PSCW is conducting an investigation into the state of the electric utility
industry in Wisconsin, particularly its institutional structure and regulatory
regime, in order to evaluate what changes would be beneficial for the state.
The PSCW stated that this investigation may result in profound and fundamental
changes to the nature and regulation of the electric utility industry in
Wisconsin. In January 1995, the PSCW established an advisory committee
("committee"), including WE, to examine all aspects of electrical service and
the electric utility industry and to suggest which functions should be
performed in a competitive market. The PSCW established a timetable to submit
a final report to the Wisconsin Legislature by the end of 1995. In October
1995, with the committee unable to reach consensus on a legislative package of
how to restructure Wisconsin's electric utility industry, the committee and
the PSCW agreed not to submit a proposal to the Wisconsin Legislature until
after 1996. The PSCW still intends to decide on December 12, 1995 the general
direction of utility regulation in Wisconsin. The PSCW has indicated that
during 1996 it will seek changes in applicable administrative rules under its
jurisdiction.
MERGER AGREEMENT WITH NORTHERN STATES POWER COMPANY
As previously reported, on April 28, 1995, Wisconsin Energy Corporation
("WEC"), WE's parent company, and Northern States Power Company, a Minnesota
corporation ("NSP"), entered into an Agreement and Plan of Merger, which was
amended and restated as of July 26, 1995 (the "Merger Agreement"). The Merger
Agreement provides for a strategic business combination involving WEC and NSP
in a "merger-of-equals" transaction. As a result, WEC will become a
registered public utility holding company under the Public Utility Holding
Company Act of 1935, as amended, and will change its name to Primergy
Corporation ("Primergy"). Primergy will be the parent company of NSP (which,
for regulatory reasons, will reincorporate in Wisconsin ("New NSP")), of WE
(which will be renamed Wisconsin Energy Company) and of the other subsidiaries
of WEC and NSP. The business combination is intended to be tax-free for
income tax purposes and to be accounted for as a "pooling of interests".
Wisconsin Energy Company will include the operations of WN, the wholly owned
gas utility subsidiary of WEC, which WEC intends to merge into WE to form a
single combined utility subsidiary, as previously planned. Completion of the
planned merger of WN into WE is expected to occur by January 1, 1996.
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FORM 10-Q
WISCONSIN ELECTRIC POWER COMPANY
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PART II - OTHER INFORMATION (Cont'd)
MERGER AGREEMENT WITH NORTHERN STATES POWER COMPANY (Cont'd)
Northern States Power Company, a Wisconsin corporation ("NSP-WI"), currently a
wholly owned subsidiary of NSP, will also be merged into Wisconsin Energy
Company in connection with the transactions contemplated by the Merger
Agreement. Prior to the merger of NSP-WI into Wisconsin Energy Company, New
NSP will acquire certain gas utility assets in LaCrosse and Hudson, Wisconsin
from NSP-WI.
WEC and NSP recognize that the divestiture of their existing gas operations
and certain non-utility operations is a possibility under the new registered
holding company structure contemplated by the Merger Agreement, but will seek
approval from the Securities and Exchange Commission ("SEC") to maintain such
businesses. If divestiture is ultimately required, the SEC has historically
allowed companies sufficient time to accomplish divestitures in a manner that
protects shareholder value.
The Merger Agreement is subject to various conditions, including the approval
of various regulatory agencies. On July 10, 1995, WEC and NSP filed an
application and supporting testimony with the Federal Energy Regulatory
Commission ("FERC") seeking approval of the proposed business combination.
FERC has received a number of protests about and requests for hearings on the
application to which WEC and NSP have responded. The matter is pending.
Applications for approval of the mergers contemplated by the Merger Agreement
and related transactions, including, in the case of certain commissions, the
issuance of securities in connection therewith, were filed in early August
1995 with the Minnesota, Wisconsin, North Dakota and Michigan utility
commissions. An application for disclaimer of jurisdiction was filed with the
South Dakota utility commission concurrently with other state applications.
The PSCW has determined that it will need a full review of WE's rates for the
1997 test year in connection with the consideration of the application for
approval of the mergers contemplated by the Merger Agreement and related
transactions. The Merger Agreement and certain related matters were approved
by shareholders of WEC and NSP at their respective meetings of shareholders
held on September 13, 1995. Applications for license amendments and approvals
relating to the proposed merger were filed with the Nuclear Regulatory
Commission in late October 1995. Subject to obtaining requisite approvals,
WEC and NSP anticipate completing this business combination late in 1996.
Further information related to the Merger Agreement was previously reported in
WEC's Current Reports on Form 8-K dated as of April 28, 1995 and as of
September 13, 1995, WE's Current Report on Form 8-K dated as of August 25,
1995 and in WEC's and WE's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1995 and June 30, 1995. Detailed information with respect to
the Merger Agreement and the transactions contemplated thereby is contained in
the Joint Proxy Statement/Prospectus dated August 7, 1995 (contained in WEC's
Registration Statement on Form S-4, Registration No. 33-61619) which relates
to the meetings of the shareholders of WEC and NSP to vote on the Merger
Agreement and related matters.
- 12 -
13
FORM 10-Q
WISCONSIN ELECTRIC POWER COMPANY
----------------------------------
PART II - OTHER INFORMATION (Cont'd)
FINANCIAL STATEMENTS OF WN AND NSP-WI
The financial statements of WN listed in the descriptions of Exhibits (99)-1
and (99)-2 in paragraph (a) of Item 6 below are incorporated herein by
reference. The audited financial statements so listed are included in Item 8
of WN's Annual Report on Form 10-K for the fiscal year ended December 31, 1994
(File No. 2-2066). The unaudited interim financial statements so listed are
included in Item 1 in Part I of WN's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995 (File No. 2-2066).
The financial statements of NSP-WI listed in the descriptions of Exhibits
(99)-3 and (99)-4 in paragraph (a) of Item 6 below are incorporated herein by
reference. The audited financial statements so listed are included in Item 8
of NSP-WI's Annual Report on Form 10-K for the fiscal year ended December 31,
1994 (File No. 10-3140). The unaudited interim financial statements so listed
are included in Item 1 in Part I of NSP-WI's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1995 (File No. 10-3140).
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
The following unaudited pro forma financial information combines the
historical balance sheets and statements of income of WE, WN, and NSP-WI.
This pro forma financial information updates through the third quarter of 1995
pro forma financial information included in ITEM 7. FINANCIAL STATEMENTS AND
EXHIBITS in WE's Current Report on Form 8-K dated as of August 25, 1995, which
also contains unaudited pro forma combined condensed statements of income of
Wisconsin Energy Company for each of the three years in the period ended
December 31, 1994, which are not repeated herein but are incorporated herein
by reference as Exhibit (99)-5 listed in paragraph (a) of Item 6 below. The
unaudited pro forma combined condensed balance sheets at September 30, 1995
give effect to the proposed business combinations as if such business
combinations had occurred at September 30, 1995. The unaudited pro forma
combined condensed statements of income for the nine months ended
September 30, 1995 and 1994 and the twelve months ended September 30, 1995
give effect to the proposed business combinations as if they had occurred at
January 1, 1994. These statements are prepared on the basis of accounting for
the proposed business combination as a pooling of interests and are based on
the assumptions set forth in the notes thereto.
The following unaudited pro forma financial information has been prepared
from, and should be read in conjunction with, the historical financial
statements and related notes thereto of WE, WN and NSP-WI. The following
information is not necessarily indicative of the financial position or
operating results that would have occurred had the proposed business
combinations been consummated on the date, or at the beginning of the periods,
for which the proposed business combinations are being given effect, nor is it
necessarily indicative of future operating results or financial position.
- 13 -
14
WISCONSIN ELECTRIC POWER COMPANY FORM 10-Q
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
SEPTEMBER 30, 1995
(In thousands)
WE WN Pro Forma WE
Pro Forma Balance Sheet As Reported As Reported Adjustments Pro Forma
------------------------------------------ -------------- -------------- -------------- --------------
Assets
Utility Plant
Electric $ 4,561,160 $ - $ - $ 4,561,160
Gas - 482,399 - 482,399
Other 39,937 - - 39,937
------------ ----------- ------------- ------------
Total 4,601,097 482,399 - 5,083,496
Accumulated provision for depreciation (2,024,680) (232,575) - (2,257,255)
Nuclear fuel - net 52,676 - - 52,676
------------ ------------ ------------- ------------
Net Utility Plant 2,629,093 249,824 - 2,878,917
Current Assets 394,139 68,559 - 462,698
Other Assets 847,058 30,412 - 877,470
------------ ------------ ------------- ------------
Total Assets $ 3,870,290 $ 348,795 $ - $ 4,219,085
============ ============ ============= ============
Liabilities and Equity
Capitalization
Common stock equity $ 1,534,392 $ 135,214 $ - $ 1,669,606
Cumulative preferred stock and premium 30,451 - - 30,451
Long-term debt 1,157,682 66,567 - 1,224,249
------------ ------------ ------------- ------------
Total Capitalization 2,722,525 201,781 - 2,924,306
Current Liabilities
Current portion of long-term debt 50,828 - - 50,828
Short-term debt 155,181 32,599 - 187,780
Other 140,829 47,344 - 188,173
------------ ------------ ------------- ------------
Total Current Liabilities 346,838 79,943 - 426,781
Other Liabilities 800,927 67,071 - 867,998
------------ ------------ ------------- ------------
Total Capitalization and Liabilities $ 3,870,290 $ 348,795 $ - $ 4,219,085
============ ============ ============= ============
<FN>
See accompanying notes to unaudited pro forma combined condensed financial statements.
- 14 -
15
NORTHERN STATES POWER COMPANY - WISCONSIN FORM 10-Q
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
SEPTEMBER 30, 1995
(In thousands)
NSP-WI Pro Forma NSP-WI
Pro Forma Balance Sheet As Reported Adjustments As Adjusted
------------------------------------------ -------------- -------------- --------------
(Note 2)
Assets
Utility Plant
Electric $ 857,841 $ - $ 857,841
Gas 92,827 (32,978) 59,849
Other 59,702 - 59,702
------------ ------------ ------------
Total 1,010,370 (32,978) 977,392
Accumulated provision for depreciation (364,448) 13,524 (350,924)
Nuclear fuel - net - - -
------------ ------------ ------------
Net Utility Plant 645,922 (19,454) 626,468
Current Assets 65,131 18,219 83,350
Other Assets 49,829 (991) 48,838
------------ ------------ ------------
Total Assets $ 760,882 $ (2,226) $ 758,656
============ ============ ============
Liabilities and Equity
Capitalization
Common stock equity $ 316,153 $ - $ 316,153
Cumulative preferred stock and premium - - -
Long-term debt 213,235 - 213,235
------------ ------------ ------------
Total Capitalization 529,388 - 529,388
Current Liabilities
Current portion of long-term debt - - -
Short-term debt 31,600 - 31,600
Other 43,407 - 43,407
------------ ------------ ------------
Total Current Liabilities 75,007 - 75,007
Other Liabilities 156,487 (2,226) 154,261
------------ ------------ ------------
Total Capitalization and Liabilities $ 760,882 $ (2,226) $ 758,656
============ ============ ============
<FN>
See accompanying notes to unaudited pro forma combined condensed financial statements.
- 15 -
16
WISCONSIN ENERGY COMPANY * FORM 10-Q
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
SEPTEMBER 30, 1995
(In thousands)
Adjusted
WE NSP-WI Pro Forma Pro Forma
Pro Forma Balance Sheet Pro Forma As Adjusted Adjustments Combined
------------------------------------------ -------------- -------------- -------------- --------------
(See Page 5) (See Page 6) (Note 3)
Assets
Utility Plant
Electric $ 4,561,160 $ 857,841 $ - $ 5,419,001
Gas 482,399 59,849 - 542,248
Other 39,937 59,702 - 99,639
------------ ------------ ------------ ------------
Total 5,083,496 977,392 - 6,060,888
Accumulated provision for depreciation (2,257,255) (350,924) - (2,608,179)
Nuclear fuel - net 52,676 - - 52,676
------------ ------------ ------------- ------------
Net Utility Plant 2,878,917 626,468 - 3,505,385
Current Assets 462,698 83,350 - 546,048
Other Assets 877,470 48,838 (137,702) 788,606
------------ ------------ ------------ ------------
Total Assets $ 4,219,085 $ 758,656 $ (137,702) $ 4,840,039
============ ============ ============ ============
Liabilities and Equity
Capitalization
Common stock equity $ 1,669,606 $ 316,153 $ - $ 1,985,759
Cumulative preferred stock and premium 30,451 - - 30,451
Long-term debt 1,224,249 213,235 - 1,437,484
------------ ------------ ------------ ------------
Total Capitalization 2,924,306 529,388 - 3,453,694
Current Liabilities
Current portion of long-term debt 50,828 - - 50,828
Short-term debt 187,780 31,600 - 219,380
Other 188,173 43,407 - 231,580
------------ ------------ ------------ ------------
Total Current Liabilities 426,781 75,007 - 501,788
Other Liabilities 867,998 154,261 (137,702) 884,557
------------ ------------ ------------ ------------
Total Capitalization and Liabilities $ 4,219,085 $ 758,656 $ (137,702) $ 4,840,039
============ ============ ============ ============
<FN>
See accompanying notes to unaudited pro forma combined condensed financial statements.
* In connection with the business combinations, WE will be renamed Wisconsin Energy Company.
- 16 -
17
FORM 10-Q
WISCONSIN ENERGY COMPANY *
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
9 MONTHS ENDED SEPTEMBER 30, 1995
(In thousands)
WE WN WE NSP-WI Pro Forma Pro Forma
As Reported As Reported Pro Forma As Reported Adjustments Combined
----------- ----------- ----------- ----------- ----------- -----------
Utility Operating Revenues
Electric $ 1,076,921 $ - $ 1,076,921 $ 283,744 $ - $ 1,360,665
Gas - 215,701 215,701 51,420 - 267,121
Steam 10,006 - 10,006 - - 10,006
----------- ----------- ----------- ----------- ----------- -----------
Total Operating Revenues 1,086,927 215,701 1,302,628 335,164 - 1,637,792
Utility Operating Expenses
Electric Production - Fuel
and Purchased Power 261,336 - 261,336 136,546 - 397,882
Cost of Gas Sold
and Transported - 129,815 129,815 35,792 - 165,607
Other Operation 258,781 39,791 298,572 58,610 - 357,182
Maintenance 78,734 3,797 82,531 14,425 - 96,956
Depreciation and Amortization 123,683 13,210 136,893 24,539 - 161,432
Taxes Other Than Income Taxes 51,363 4,386 55,749 10,455 - 66,204
Income Taxes 92,495 7,113 99,608 15,973 - 115,581
----------- ----------- ----------- ----------- ----------- -----------
Total Operating Expenses 866,392 198,112 1,064,504 296,340 - 1,360,844
----------- ----------- ----------- ----------- ----------- -----------
Utility Operating Income 220,535 17,589 238,124 38,824 - 276,948
Other Income (Expense) 18,119 (761) 17,358 1,092 - 18,450
----------- ----------- ----------- ----------- ----------- -----------
Income Before Interest Charges
and Preferred Dividends 238,654 16,828 255,482 39,916 - 295,398
Interest Charges 77,020 5,511 82,531 14,448 - 96,979
----------- ----------- ----------- ----------- ----------- -----------
Net Income 161,634 11,317 172,951 25,468 - 198,419
Preferred Dividend
Stock Requirement 902 - 902 - - 902
----------- ----------- ----------- ----------- ----------- -----------
Earnings Available
for Common Stockholder $ 160,732 $ 11,317 $ 172,049 $ 25,468 $ - $ 197,517
=========== =========== =========== =========== =========== ===========
<FN>
See accompanying notes to unaudited pro forma combined condensed financial statements.
* In connection with the business combinations, WE will be renamed Wisconsin Energy Company.
- 17 -
18
FORM 10-Q
WISCONSIN ENERGY COMPANY *
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
9 MONTHS ENDED SEPTEMBER 30, 1994
(In thousands)
WE WN WE NSP-WI Pro Forma Pro Forma
As Reported As Reported Pro Forma As Reported Adjustments Combined
----------- ----------- ----------- ----------- ----------- -----------
Utility Operating Revenues
Electric $ 1,056,249 $ - $ 1,056,249 $ 281,031 $ - $ 1,337,280
Gas - 243,644 243,644 54,177 - 297,821
Steam 10,640 - 10,640 - - 10,640
----------- ----------- ----------- ----------- ----------- -----------
Total Operating Revenues 1,066,889 243,644 1,310,533 335,208 - 1,645,741
Utility Operating Expenses
Electric Production - Fuel
and Purchased Power 250,378 - 250,378 135,237 - 385,615
Cost of Gas Sold
and Transported - 151,587 151,587 39,051 - 190,638
Other Operation 262,993 43,867 306,860 59,964 - 366,824
Maintenance 88,681 4,848 93,529 15,827 - 109,356
Revitalization 63,500 10,400 73,900 - - 73,900
Depreciation and Amortization 119,740 12,560 132,300 22,821 - 155,121
Taxes Other Than Income Taxes 54,081 4,904 58,985 10,252 - 69,237
Income Taxes 61,190 3,266 64,456 13,099 - 77,555
----------- ----------- ----------- ----------- ----------- -----------
Total Operating Expenses 900,563 231,432 1,131,995 296,251 - 1,428,246
----------- ----------- ----------- ----------- ----------- -----------
Utility Operating Income 166,326 12,212 178,538 38,957 - 217,495
Other Income (Expense) 17,784 229 18,013 1,047 - 19,060
----------- ----------- ----------- ----------- ----------- -----------
Income Before Interest Charges
and Preferred Dividends 184,110 12,441 196,551 40,004 - 236,555
Interest Charges 73,296 5,812 79,108 13,362 - 92,470
----------- ----------- ----------- ----------- ----------- -----------
Net Income 110,814 6,629 117,443 26,642 - 144,085
Preferred Dividend
Stock Requirement 1,050 - 1,050 - - 1,050
----------- ----------- ----------- ----------- ----------- -----------
Earnings Available
for Common Stockholder $ 109,764 $ 6,629 $ 116,393 $ 26,642 $ - $ 143,035
=========== =========== =========== =========== =========== ===========
<FN>
See accompanying notes to unaudited pro forma combined condensed financial statements.
* In connection with the business combinations, WE will be renamed Wisconsin Energy Company.
- 18 -
19
FORM 10-Q
WISCONSIN ENERGY COMPANY *
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
12 MONTHS ENDED SEPTEMBER 30, 1995
(In thousands)
WE WN WE NSP-WI Pro Forma Pro Forma
As Reported As Reported Pro Forma As Reported Adjustments Combined
----------- ----------- ----------- ----------- ----------- -----------
Utility Operating Revenues
Electric $ 1,424,234 $ - $ 1,424,234 $ 377,490 $ - $ 1,801,724
Gas - 296,406 296,406 73,957 - 370,363
Steam 13,647 - 13,647 - - 13,647
----------- ----------- ----------- ----------- ----------- -----------
Total Operating Revenues 1,437,881 296,406 1,734,287 451,447 - 2,185,734
Utility Operating Expenses
Electric Production - Fuel
and Purchased Power 339,443 - 339,443 180,868 - 520,311
Cost of Gas Sold
and Transported - 177,739 177,739 50,224 - 227,963
Other Operation 340,553 50,170 390,723 76,603 - 467,326
Maintenance 108,191 5,413 113,604 20,983 - 134,587
Depreciation and Amortization 164,701 17,506 182,207 32,454 - 214,661
Taxes Other Than Income Taxes 67,438 5,361 72,799 13,914 - 86,713
Income Taxes 122,788 12,125 134,913 21,951 - 156,864
----------- ----------- ----------- ----------- ----------- -----------
Total Operating Expenses 1,143,114 268,314 1,411,428 396,997 - 1,808,425
----------- ----------- ----------- ----------- ----------- -----------
Utility Operating Income 294,767 28,092 322,859 54,450 - 377,309
Other Income (Expense) 25,551 (872) 24,679 1,580 - 26,259
----------- ----------- ----------- ----------- ----------- -----------
Income Before Interest Charges
and Preferred Dividends 320,318 27,220 347,538 56,030 - 403,568
Interest Charges 102,553 7,723 110,276 18,660 - 128,936
----------- ----------- ----------- ----------- ----------- -----------
Net Income 217,765 19,497 237,262 37,370 - 274,632
Preferred Dividend
Stock Requirement 1,203 - 1,203 - - 1,203
----------- ----------- ----------- ----------- ----------- -----------
Earnings Available
for Common Stockholder $ 216,562 $ 19,497 $ 236,059 $ 37,370 $ - $ 273,429
=========== =========== =========== =========== =========== ===========
<FN>
See accompanying notes to unaudited pro forma combined condensed financial statements.
* In connection with the business combinations, WE will be renamed Wisconsin Energy Company.
- 19 -
20
FORM 10-Q
WISCONSIN ENERGY COMPANY *
---------------------------------------------------------
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
1. The pro forma combined condensed financial statements reflect the
previously planned merger by WEC of WN into WE to form a single
combined utility subsidiary. Completion of the planned merger is
expected to occur by January 1, 1996.
As previously reported, on April 28, 1995, WEC, WE's parent company,
and NSP entered into a Merger Agreement, which was amended and
restated as of July 26, 1995. The Merger Agreement provides for a
strategic business combination involving WEC and NSP in a "merger-of-
equals" transaction. As a result, WEC will become a registered public
utility holding company under the Public Utility Holding Company Act
of 1935, as amended, and will change its name to Primergy. Primergy
will be the parent company of NSP, WE (which will be renamed Wisconsin
Energy Company) and the other subsidiaries of WEC and NSP. The
business combination is intended to be tax-free for income tax
purposes and to be accounted for as a "pooling of interests". Subject
to obtaining all requisite approvals, WEC and NSP anticipate
completing this business combination late in 1996.
As part of this proposed merger, the pro forma combined condensed
financial statements reflect the merger of NSP-WI, currently a wholly
owned subsidiary of NSP, into Wisconsin Energy Company. Prior to the
merger of NSP-WI into Wisconsin Energy Company, New NSP will acquire
certain gas utility assets in LaCrosse and Hudson, Wisconsin from
NSP-WI.
2. A pro forma adjustment has been made in the NSP-WI Unaudited Pro Forma
Condensed Balance Sheet at September 30, 1995 to reflect the sale at net
book value of the gas utility assets and liabilities of NSP-WI divisions
in LaCrosse and Hudson, Wisconsin to New NSP.
3. A pro forma adjustment has been made in the Wisconsin Energy Company
Unaudited Pro Forma Combined Condensed Balance Sheet at September 30,
1995 to conform the presentation of noncurrent deferred income taxes
into one net amount. All other financial statement presentation and
accounting policy differences are immaterial and have not been
adjusted in the pro forma combined condensed financial statements.
4. Pro forma income statement amounts for Wisconsin Energy Company do not
reflect the transfer of the LaCrosse and Hudson divisions by NSP-WI to
New NSP. The revenues related to those divisions for the twelve
months ended September 30, 1995 and for the nine months ended
September 30, 1995 and 1994 were $26,822,000, $20,721,000 and
$21,927,000, respectively. The amount of related expenses have not
been quantified.
5. Intercompany transactions (including purchased power and exchanged
power transactions) between WE and NSP-WI during the periods presented
were not material and, accordingly, no pro forma adjustments were made
to eliminate such transactions.
* In connection with the business combinations, WE will be renamed Wisconsin
Energy Company.
- 20 -
21
FORM 10-Q
WISCONSIN ENERGY COMPANY *
----------------------------------------------------
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (Cont'd)
6. The allocation between NSP and WEC and their customers of the
estimated cost savings resulting from the transactions contemplated by
the Merger Agreement, net of the costs incurred to achieve such
savings, will be subject to regulatory review and approval.
Transaction costs are currently estimated to be approximately
$30,000,000 (including fees for financial advisors, attorneys,
accountants, consultants, filings and printing). None of these
estimated cost savings, the costs to achieve such savings, or
transaction costs have been reflected in the pro forma combined
condensed financial statements.
* In connection with the business combinations, WE will be renamed Wisconsin
Energy Company.
- 21 -
22
FORM 10-Q
WISCONSIN ELECTRIC POWER COMPANY
----------------------------------
PART II - OTHER INFORMATION (Cont'd)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The following Exhibit is filed with this report:
Exhibit No.
(27)-1 Wisconsin Electric Power Company ("WE") Financial Data Schedule
for the nine months ended September 30, 1995.
The following Exhibits are incorporated herein by reference:
(2)-1 Amended and Restated Agreement and Plan of Merger, dated as of
April 28, 1995, as amended and restated as of July 26, 1995, by
and among Northern States Power Company, Wisconsin Energy
Corporation ("WEC"), Northern Power Wisconsin Corp. and WEC Sub
Corp. (Exhibit (2)-1 to WEC's Registration Statement on Form
S-4 filed on August 7, 1995, Registration No. 33-61619.)
(2)-2 Plan and Agreement of Merger, dated June 30, 1994, by and
between WE and WN. (Appendix A to WE's Proxy Statement dated
October 31, 1994, in File No. 1-1245.)
(99)-1 Audited Financial Statements of WN at December 31, 1994 and 1993
and for each of the three years in the period ended
December 31, 1994. (Item 8 of WN's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994, File No. 2-2066.)
(99)-2 Unaudited Interim Financial Statements of WN at
September 30, 1995 and for the three and nine month periods
ended September 30, 1995 and 1994. (Item 1 in Part I of WN's
Quarterly Report on Form 10-Q for the Quarter ended
September 30, 1995, File No. 2-2066.)
(99)-3 Audited Financial Statements of NSP-WI at December 31, 1994 and
1993 and for each of the three years in the period ended
December 31, 1994. (Item 8 of NSP-WI's Annual Report on Form
10-K for the fiscal year ended December 31, 1994, File No.
10-3140.)
(99)-4 Unaudited Interim Financial Statements of NSP-WI at
September 30, 1995 and for the three and nine month periods
ended September 30, 1995 and 1994. (Item 1 in Part I of
NSP-WI's Quarterly Report on Form 10-Q for the Quarter ended
September 30, 1995, File No. 10-3140.)
(99)-5 Wisconsin Energy Company unaudited pro forma combined condensed
statements of income for each of the three years in the period
ended December 31, 1994. (Included in WE's Current Report on
Form 8-K dated as of August 25, 1995.)
- 22 -
23
FORM 10-Q
WISCONSIN ELECTRIC POWER COMPANY
----------------------------------
PART II - OTHER INFORMATION (Cont'd)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (Cont'd)
(b) Reports on Form 8-K:
A Current Report on Form 8-K, dated as of August 25, 1995, was filed on
August 25, 1995 to file financial statements of WN and NSP-WI and pro forma
financial information with respect to the proposed mergers of WN and
NSP-WI into WE and to report certain other recent developments under
Items 5 and 7 of Form 8-K.
- 23 -
24
FORM 10-Q
WISCONSIN ELECTRIC POWER COMPANY
----------------------------------
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/ R. R. Grigg, Jr.
--------------------------------------
Date: November 10, 1995 R. R. Grigg, Jr., President and Chief
Operating Officer
/s/ A. K. Klisurich
--------------------------------------
Date: November 10, 1995 A. K. Klisurich, Controller - Chief
Accounting Officer
- 24 -
25
WISCONSIN ELECTRIC POWER COMPANY
----------------------------------
EXHIBIT INDEX
Quarterly Report on Form 10-Q
For the Quarter Ended September 30, 1995
Exhibit
Number
- -------
The following Exhibit is filed with this report:
(27)-1 Wisconsin Electric Power Company ("WE" or "Wisconsin Electric")
Financial Data Schedule for the nine months ended September 30, 1995.
The following Exhibits are incorporated herein by reference:
(2)-1 Amended and Restated Agreement and Plan of Merger, dated as of
April 28, 1995, as amended and restated as of July 26, 1995, by
and among Northern States Power Company, Wisconsin Energy
Corporation ("WEC"), Northern Power Wisconsin Corp. and WEC Sub
Corp. (Exhibit (2)-1 to WEC's Registration Statement on Form
S-4 filed on August 7, 1995, Registration No. 33-61619.)
(2)-2 Plan and Agreement of Merger, dated June 30, 1994, by and
between WE and WN. (Appendix A to WE's Proxy Statement dated
October 31, 1994, in File No. 1-1245.)
(99)-1 Audited Financial Statements of WN at December 31, 1994 and 1993
and for each of the three years in the period ended
December 31, 1994. (Item 8 of WN's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994, File No. 2-2066.)
(99)-2 Unaudited Interim Financial Statements of WN at
September 30, 1995 and for the three and nine month periods
ended September 30, 1995 and 1994. (Item 1 in Part I of WN's
Quarterly Report on Form 10-Q for the Quarter ended
September 30, 1995, File No. 2-2066.)
(99)-3 Audited Financial Statements of NSP-WI at December 31, 1994 and
1993 and for each of the three years in the period ended
December 31, 1994. (Item 8 of NSP-WI's Annual Report on Form
10-K for the fiscal year ended December 31, 1994, File No.
10-3140.)
(99)-4 Unaudited Interim Financial Statements of NSP-WI at
September 30, 1995 and for the three and nine month periods
ended September 30, 1995 and 1994. (Item 1 in Part I of
NSP-WI's Quarterly Report on Form 10-Q for the Quarter ended
September 30, 1995, File No. 10-3140.)
(99)-5 Wisconsin Energy Company unaudited pro forma combined condensed
statements of income for each of the three years in the period
ended December 31, 1994. (Included in WE's Current Report on
Form 8-K dated as of August 25, 1995.)
- 25 -