Exhibit 99.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
------------------------
Financial statements and schedules furnished in lieu of the
FORM 11-K
Annual Report
Pursuant to Rule 15d-21 under the
Securities Exchange Act of 1934
------------------------
For the fiscal year ended December 31, 1997
A. Full title of the Plan and the address of the Plan, if different
from that of the issuer named below:
WISCONSIN ELECTRIC POWER COMPANY
EMPLOYEE RETIREMENT SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the Plan and
the address of its principal executive office:
WISCONSIN ENERGY CORPORATION
231 West Michigan Street
P.O. Box 2949
Milwaukee, Wisconsin 53201
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Administrator has duly caused this annual report to be signed by the
undersigned thereunto duly authorized.
WISCONSIN ELECTRIC POWER COMPANY
EMPLOYEE RETIREMENT SAVINGS PLAN
--------------------------------
Name of Plan
June 26, 1998 By /s/ Calvin H. Baker
---------------------------------
Calvin H. Baker,
Plan Administrator
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Participants and
Plan Administrator of the
Wisconsin Electric Power Company
Employee Retirement Savings Plan
In our opinion, the accompanying statements of net assets available for
benefits with fund information and the related statements of changes in net
assets available for benefits with fund information present fairly, in all
material respects, the net assets available for benefits of the Wisconsin
Electric Power Company Employee Retirement Savings Plan (the "Plan") at
December 31, 1997 and 1996, and the changes in net assets available for
benefits for the years then ended, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
the Plan's administrator; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audits to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by the plan administrator, and evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for the opinion expressed above.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information included in
the Schedule of Assets Held for Investment Purposes and the Schedule of
Reportable Transactions is presented for the purpose of additional analysis and
is not a required part of the basic financial statements but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The Fund Information in the statements of net assets available for
benefits and the statements of changes in net assets available for benefits is
presented for purposes of additional analysis rather than to present the net
assets available for benefits and changes in net assets available for benefits
of each fund. The Schedules and Fund Information have been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
/s/Price Waterhouse LLP
- -----------------------
PRICE WATERHOUSE LLP
Milwaukee, Wisconsin
June 23, 1998
WISCONSIN ELECTRIC POWER COMPANY
EMPLOYEE RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
December 31, 1997
(Page 1 of 2)
--------------------------------------------------------------------------------
Participant-Directed
--------------------------------------------------------------------------------
Fidelity
WEC Fidelity Fidelity U.S. Equity
Blended Rate Common Equity Growth Index Fidelity
Income Stock Income Company Commingled Balanced
Fund Fund Fund Fund Pool Fund
------------ ------------ ----------- ----------- ------------ -----------
Assets
Investments, at fair value (Note 2)
Mutual and pooled funds $ 0 $101,877,660 $70,115,105 $50,839,073 $39,381,423 $10,283,658
Participant notes receivable 0 0 0 0 0 0
----------- ------------ ----------- ----------- ----------- -----------
0 101,877,660 70,115,105 50,839,073 39,381,423 10,283,658
----------- ------------ ----------- ----------- ----------- -----------
Investments, at contract value
(Note 2) 57,771,773 0 0 0 0 0
----------- ------------ ----------- ----------- ----------- -----------
Total Investments 57,771,773 101,877,660 70,115,105 50,839,073 39,381,423 10,283,658
----------- ------------ ----------- ----------- ----------- -----------
Cash 3,932,769 986,258 0 0 0 0
----------- ------------ ----------- ----------- ----------- -----------
Net assets available
for benefits $61,704,542 $102,863,918 $70,115,105 $50,839,073 $39,381,423 $10,283,658
=========== ============ =========== =========== =========== ===========
The accompanying notes are an integral part of the financial statements.
/TABLE
WISCONSIN ELECTRIC POWER COMPANY
EMPLOYEE RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
(Continued)
December 31, 1997
(Page 2 of 2)
--------------------------------------------------------------------------------
Participant-Directed
--------------------------------------------------------------------------------
Fidelity
Retirement
Government Fidelity Fidelity
Money U.S. Bond Fidelity Low-Priced
Market Index Overseas Stock Loan
Portfolio Portfolio Fund Fund Fund Total
----------- ---------- ---------- ----------- ----------- ------------
Assets
Investments, at fair value (Note 2)
Mutual and pooled funds $ 2,541,425 $ 4,008,540 $13,648,013 $15,810,049 $ 0 $308,504,946
Participant notes receivable 0 0 0 0 7,341,361 7,341,361
----------- ----------- ----------- ----------- ----------- ------------
2,541,425 4,008,540 13,648,013 15,810,049 7,341,361 315,846,307
----------- ----------- ----------- ----------- ----------- ------------
Investments, at contract value
(Note 2) 0 0 0 0 0 57,771,773
----------- ----------- ----------- ----------- ----------- ------------
Total Investments 2,541,425 4,008,540 13,648,013 15,810,049 7,341,361 373,618,080
----------- ----------- ----------- ----------- ----------- ------------
Cash 0 0 0 0 0 4,919,027
----------- ----------- ----------- ----------- ----------- ------------
Net assets available
for benefits $ 2,541,425 $ 4,008,540 $13,648,013 $15,810,049 $ 7,341,361 $378,537,107
=========== =========== =========== =========== =========== ============
The accompanying notes are an integral part of the financial statements.
/TABLE
WISCONSIN ELECTRIC POWER COMPANY
EMPLOYEE RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
December 31, 1996
(Page 1 of 2)
--------------------------------------------------------------------------------
Participant-Directed
--------------------------------------------------------------------------------
Fidelity
WEC Fidelity Fidelity U.S. Equity
Blended Rate Common Equity Growth Index Fidelity
Income Stock Income Company Commingled Balanced
Fund Fund Fund Fund Pool Fund
------------ ----------- ----------- ----------- ------------ ----------
Assets
Investments, at fair value (Note 2)
Mutual and pooled funds $ 0 $65,335,953 $18,136,684 $15,936,890 $ 9,536,864 $2,656,467
Participant notes receivable 0 0 0 0 0 0
----------- ----------- ----------- ----------- ----------- ----------
0 65,335,953 18,136,684 15,936,890 9,536,864 2,656,467
----------- ----------- ----------- ----------- ----------- ----------
Investments, at contract value
(Note 2) 25,564,914 0 0 0 0 0
----------- ----------- ----------- ----------- ----------- ----------
Total investments 25,564,914 65,335,953 18,136,684 15,936,890 9,536,864 2,656,467
----------- ----------- ----------- ----------- ----------- ----------
Cash 1,039,465 0 0 0 0 0
----------- ----------- ----------- ----------- ----------- ----------
Net assets available
for benefits $26,604,379 $65,335,953 $18,136,684 $15,936,890 $ 9,536,864 $2,656,467
=========== =========== =========== =========== =========== ==========
The accompanying notes are an integral part of the financial statements.
/TABLE
WISCONSIN ELECTRIC POWER COMPANY
EMPLOYEE RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
(Continued)
December 31, 1996
(Page 2 of 2)
---------------------------------------------------------------
Participant-Directed
---------------------------------------------------------------
Fidelity
Retirement
Government Fidelity Fidelity
Money U.S. Bond Fidelity Low-Priced
Market Index Overseas Stock Loan
Portfolio Portfolio Fund Fund Fund Total
------------ ---------- ---------- ----------- ----------- -----------
Assets
Investments at fair value (Note 2)
Mutual and pooled funds $1,516,878 $1,080,282 $4,559,336 $ 416,072 $ 0 $119,175,426
Participant notes receivable 0 0 0 0 3,748,310 3,748,310
---------- ---------- ---------- ----------- ---------- ------------
1,516,878 1,080,282 4,559,336 416,072 3,748,310 122,923,736
---------- ---------- ---------- ----------- ---------- ------------
Investments, at contract value
(Note 2) 0 0 0 0 0 25,564,914
---------- ---------- ---------- ----------- ---------- ------------
Total investments 1,516,878 1,080,282 4,559,336 416,072 3,748,310 148,488,650
---------- ---------- ---------- ----------- ---------- ------------
Cash 0 0 0 0 0 1,039,465
---------- ---------- ---------- ----------- ---------- ------------
Net assets available
for benefits $1,516,878 $1,080,282 $4,559,336 $ 416,072 $3,748,310 $149,528,115
========== ========== ========== =========== ========== ============
The accompanying notes are an integral part of the financial statements.
/TABLE
WISCONSIN ELECTRIC POWER COMPANY
EMPLOYEE RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
For the Year Ended December 31, 1997
(Page 1 of 2)
--------------------------------------------------------------------------------------------
Participant-Directed
--------------------------------------------------------------------------------------------
Fidelity
WEC Fidelity Fidelity U.S. Equity
Blended Rate Common Equity Growth Index Fidelity
Income Stock Income Company Commingled Balanced
Fund Fund Fund Fund Pool Fund
------------ ------------- ------------ ---------- ------------ ----------
Additions
Additions to net assets
attributed to:
Investment income:
Interest and dividends $ 3,820,041 $ 5,340,758 $ 3,671,549 $ 4,817,362 $ 0 $ 1,111,059
Net appreciation in fair
value of investments 0 6,833,218 11,122,664 2,535,857 8,842,785 502,918
----------- ------------ ----------- ----------- ----------- ----------
3,820,041 12,173,976 14,794,213 7,353,219 8,842,785 1,613,977
----------- ------------ ----------- ----------- ----------- ----------
Contributions:
Participants' 3,541,714 3,051,017 4,502,306 4,681,760 2,500,993 1,029,023
Employer's 0 6,590,584 0 0 0 0
----------- ------------ ----------- ----------- ----------- ----------
3,541,714 9,641,601 4,502,306 4,681,760 2,500,993 1,029,023
----------- ------------ ----------- ----------- ----------- ----------
Total additions 7,361,755 21,815,577 19,296,519 12,034,979 11,343,778 2,643,000
----------- ------------ ----------- ----------- ----------- ----------
Deductions
Deductions from net assets
attributed to:
Administrative expenses 0 19,599 202 43 43 0
Benefits paid to
participants 3,286,621 3,618,176 2,284,589 1,192,028 938,429 319,200
----------- ------------ ----------- ----------- ----------- ----------
Total deductions 3,286,621 3,637,775 2,284,791 1,192,071 938,472 319,200
----------- ------------ ----------- ----------- ----------- ----------
Net increase prior to
interfund and plan transfers 4,075,134 18,177,802 17,011,728 10,842,908 10,405,306 2,323,800
Interfund transfers (2,956,129) (26,358,739) 7,365,745 1,910,693 4,823,589 1,996,513
Plan transfers (Note 3) 33,981,158 45,708,902 27,600,948 22,148,582 14,615,664 3,306,878
----------- ------------ ----------- ----------- ----------- ----------
Net increase 35,100,163 37,527,965 51,978,421 34,902,183 29,844,559 7,627,191
Net assets available for
benefits:
Beginning of year 26,604,379 65,335,953 18,136,684 15,936,890 9,536,864 2,656,467
----------- ------------ ----------- ----------- ----------- -----------
End of year $61,704,542 $102,863,918 $70,115,105 $50,839,073 $39,381,423 $10,283,658
=========== ============ =========== =========== =========== ===========
The accompanying notes are an integral part of the financial statements.
/TABLE
WISCONSIN ELECTRIC POWER COMPANY
EMPLOYEE RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
(Continued)
For the Year Ended December 31, 1997
(Page 2 of 2)
--------------------------------------------------------------------------------------------
Participant-Directed
--------------------------------------------------------------------------------------------
Fidelity
Retirement
Government Fidelity Fidelity
Money U.S. Bond Fidelity Low-Priced
Market Index Overseas Stock Loan
Portfolio Portfolio Fund Fund Fund Total
----------- ----------- ----------- ----------- ---------- ------------
Additions
Additions to net assets
attributed to:
Investment income:
Interest and dividends $ 127,930 $ 204,445 $ 673,104 $ 871,622 $ 622,851 $ 21,260,721
Net appreciation in fair
value of investments 0 76,015 446,158 1,120,932 0 31,480,547
----------- ----------- ----------- ----------- ----------- ------------
127,930 280,460 1,119,262 1,992,554 622,851 52,741,268
----------- ----------- ----------- ----------- ----------- ------------
Contributions:
Participants' 344,205 433,120 1,579,687 1,398,604 0 23,062,429
Employer's 0 0 0 0 0 6,590,584
----------- ----------- ----------- ----------- ----------- ------------
344,205 433,120 1,579,687 1,398,604 0 29,653,013
----------- ----------- ----------- ----------- ----------- ------------
Total additions 472,135 713,580 2,698,949 3,391,158 622,851 82,394,281
----------- ----------- ----------- ----------- ----------- ------------
Deductions
Deductions from net assets
attributed to:
Administrative expenses 46 0 39 941 0 20,913
Benefits paid to
participants 233,269 27,970 267,480 159,564 178,536 12,505,862
----------- ----------- ----------- ----------- ----------- ------------
Total deductions 233,315 27,970 267,519 160,505 178,536 12,526,775
----------- ----------- ----------- ----------- ----------- ------------
Net increase prior to
interfund and plan transfers 238,820 685,610 2,431,430 3,230,653 444,315 69,867,506
Interfund transfers (77,334) 820,936 1,052,880 11,558,373 (136,527) 0
Plan transfers (Note 3) 863,061 1,421,712 5,604,367 604,951 3,285,263 159,141,486
----------- ----------- ----------- ----------- ----------- ------------
Net increase 1,024,547 2,928,258 9,088,677 15,393,977 3,593,051 229,008,992
Net assets available for
benefits:
Beginning of year 1,516,878 1,080,282 4,559,336 416,072 3,748,310 149,528,115
----------- ----------- ----------- ----------- ----------- ------------
End of year $ 2,541,425 $ 4,008,540 $13,648,013 $15,810,049 $ 7,341,361 $378,537,107
=========== =========== =========== =========== =========== ============
The accompanying notes are an integral part of the financial statements.
/TABLE
WISCONSIN ELECTRIC POWER COMPANY
EMPLOYEE RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
For the year ended December 31, 1996
(Page 1 of 2)
---------------------------------------------------------------------------------------------
Participant-Directed
---------------------------------------------------------------------------------------------
Fidelity
WEC Fidelity Fidelity U.S. Equity
Blended Rate Common Equity Growth Index Fidelity
Income Stock Income Company Commingled Balanced
Fund Fund Fund Fund Pool Fund
------------ ------------ ------------ ---------- ------------ ----------
Additions
Additions to net assets
attributed to:
Investment income:
Interest and dividends $ 1,602,061 $ 1,321,688 $ 1,105,721 $ 680,465 $ 0 $ 116,879
Net (depreciation)
appreciation in fair
value of investments 0 (6,682,103) 1,839,271 1,345,626 1,615,020 104,366
----------- ----------- ----------- ----------- ----------- ----------
1,602,061 (5,360,415) 2,944,992 2,026,091 1,615,020 221,245
----------- ----------- ----------- ----------- ----------- ----------
Contributions:
Participants' 2,040,404 2,491,733 1,584,191 1,881,337 751,535 417,440
Employer's 0 2,971,574 0 0 0 0
----------- ----------- ----------- ----------- ----------- ----------
2,040,404 5,463,307 1,584,191 1,881,337 751,535 417,440
----------- ----------- ----------- ----------- ----------- ----------
Total additions 3,642,465 102,892 4,529,183 3,907,428 2,366,555 638,685
----------- ----------- ----------- ----------- ----------- ----------
Deductions
Deductions from net assets
attributed to:
Administrative Expenses 0 7,098 74 0 0 0
Benefits paid to
participants 1,432,370 2,342,952 489,971 300,465 94,944 109,350
----------- ----------- ----------- ----------- ----------- ----------
Total deductions 1,432,370 2,350,050 490,045 300,465 94,944 109,350
----------- ----------- ----------- ----------- ----------- ----------
Net increase (decrease) prior
to interfund and plan transfers 2,210,095 (2,247,158) 4,039,138 3,606,963 2,271,611 529,335
Interfund transfers (1,957,844) (3,552,379) 1,287,793 1,724,412 924,712 (175,159)
Plan transfers (Note 3) (102,987) (155,435) (84,401) (82,472) (46,329) (28,571)
----------- ----------- ----------- ----------- ----------- ----------
Net increase (decrease) 149,264 (5,954,972) 5,242,530 5,248,903 3,149,994 325,605
Net assets available for
benefits:
Beginning of year 26,455,115 71,290,925 12,894,154 10,687,987 6,386,870 2,330,862
----------- ----------- ----------- ----------- ----------- ----------
End of year $26,604,379 $65,335,953 $18,136,684 $15,936,890 $ 9,536,864 $2,656,467
=========== =========== =========== =========== =========== ==========
The accompanying notes are an integral part of the financial statements.
/TABLE
WISCONSIN ELECTRIC POWER COMPANY
EMPLOYEE RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
(Continued)
For the year ended December 31, 1996
(Page 2 of 2)
-------------------------------------------------------------------------------
Participant-Directed
-------------------------------------------------------------------------------
Fidelity
Retirement
Government Fidelity Fidelity
Money U.S. Bond Fidelity Low-Priced
Market Index Overseas Stock Loan
Portfolio Portfolio Fund Fund Fund Total
----------- ----------- ----------- ----------- ----------- ------------
Additions
Additions to net assets
attributed to:
Investment income:
Interest and dividends $ 67,161 $ 67,432 $ 275,246 $ 3,707 $ 279,535 $ 5,519,895
Net (depreciation)
appreciation in fair
value of investments 0 (33,020) 194,973 4,997 0 (1,610,870)
----------- ----------- ----------- ----------- ----------- ------------
67,161 34,412 470,219 8,704 279,535 3,909,025
----------- ----------- ----------- ----------- ----------- ------------
Contributions:
Participants' 215,406 166,461 592,783 6,587 0 10,147,877
Employer's 0 0 0 0 0 2,971,574
----------- ----------- ----------- ----------- ----------- ------------
215,406 166,461 592,783 6,587 0 13,119,451
----------- ----------- ----------- ----------- ----------- ------------
Total additions 282,567 200,873 1,063,002 15,291 279,535 17,028,476
----------- ----------- ----------- ----------- ----------- ------------
Deductions
Deductions from net assets
attributed to:
Administrative Expenses 0 0 0 0 0 7,172
Benefits paid to
participants 80,093 22,337 23,224 0 39,338 4,935,044
----------- ----------- ----------- ----------- ----------- ------------
Total deductions 80,093 22,337 23,224 0 39,338 4,942,216
----------- ----------- ----------- ----------- ----------- ------------
Net increase (decrease) prior
to interfund and plan transfers 202,474 178,536 1,039,778 15,291 240,197 12,086,260
Interfund transfers (59,719) 75,283 660,674 400,781 671,446 0
Plan transfers (Note 3) 31,072 (11,920) (29,044) 0 (41,744) (551,831)
----------- ----------- ----------- ----------- ----------- ------------
Net increase (decrease) 173,827 241,899 1,671,408 416,072 869,899 11,534,429
Net assets available for
benefits:
Beginning of year 1,343,051 838,383 2,887,928 0 2,878,411 137,993,686
----------- ----------- ----------- ----------- ----------- ------------
End of year $ 1,516,878 $ 1,080,282 $ 4,559,336 $ 416,072 $ 3,748,310 $149,528,115
=========== =========== =========== =========== =========== ============
The accompanying notes are an integral part of the financial statements.
/TABLE
WISCONSIN ELECTRIC POWER COMPANY
EMPLOYEE RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 and 1996
NOTE 1 - DESCRIPTION OF THE PLAN
- --------------------------------
The following description of the Wisconsin Electric Power Company ("WE" or the
"Company") Employee Retirement Savings Plan ("ERSP" or "Plan") provides only
general information. Participants should refer to the Plan agreement for a
more comprehensive description of the Plan's provisions.
General - The Plan is a defined contribution plan covering all employees of WE
who are projected to complete at least 1000 hours of service within one year
from hire date. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA").
Contributions - Contributions are subject to certain limitations of the
Internal Revenue Code ("IRC"). Prior to 1996, participants were allowed to
make a pre-tax contribution of up to 15% of their pre-tax base wages, as
defined in the Plan. Effective January 1, 1996, participants were also allowed
to contribute to the Plan on a post tax basis. Additionally, the percentage of
base wages that were allowed to be contributed was raised to 20%. Participants
may also contribute amounts representing distributions from other qualified
defined benefit or defined contribution plans. The Company matches 50 percent
of the first 6 percent of base wages up to a maximum contribution of 3 percent
of qualified compensation, as defined in the Plan. All employer contributions
are invested in the Wisconsin Energy Corporation ("WEC") Common Stock Fund.
Participant Accounts - Each participant's account is credited with the
participant's contribution and allocations of (a) the Company's contribution
and (b) Plan earnings. Earnings on investments are not taxed while such
amounts accumulate in the Plan.
Vesting - Participants are immediately vested in their contributions plus
actual earnings thereon. Vesting in the Company's matching contribution
portion of their account plus actual earnings thereon occurs after the
participant achieves 1000 hours of service.
Investment Options - Participant contributions may be made, in whole
percentages, to any of the following investment options:
- Blended Rate Income Fund - This fund invests in a series of guaranteed
investment contracts from insurance companies or financial institutions
in order to provide a blended rate of return with a low risk to
principal.
- WEC Common Stock Fund - This fund invests in WEC common stock.
- Fidelity Equity Income Fund - This fund invests in securities with
above-average yields and the potential for future investment growth.
- Fidelity Growth Company Fund - This fund invests primarily in common
stocks and securities convertible into common stocks seeking long-term
capital appreciation.
- Fidelity U.S. Equity Index Commingled Pool - This fund attempts to
provide results corresponding to the total return performance of a broad
number of common stocks publicly traded in the United States, by
approximating the composition and total return of the Standard & Poor's
500-stock index.
- Fidelity Balanced Fund - This fund invests primarily in investment-grade
or higher bonds, and other high-yielding securities, including foreign
and domestic stocks. The fund seeks as much income as possible while
preserving capital.
- Fidelity Retirement Government Money Market Portfolio - This fund
invests in obligations issued or guaranteed as to principal and interest
by the U.S. government, its agencies and instrumentalities. The fund
seeks a high level of current income while preserving the principal
of its investors.
- Fidelity U.S. Bond Index Portfolio - This fund attempts to balance its
investments in U.S. government, corporate, mortgage and income
securities in the same proportion as their representation in the Lehman
Brothers Aggregate Bond Index, a U.S. investment-grade, fixed-income
index comprising approximately 6,500 securities.
- Fidelity Overseas Fund - This fund invests primarily in foreign
securities. The fund seeks long-term capital appreciation.
- Fidelity Low-Priced Stock Fund - This fund invests mainly in low-priced
common and preferred stock ($35 or less at time of purchase). This fund
seeks long-term capital appreciation.
The value of participant investments in the Blended Rate Income Fund grows
through interest earnings at negotiated interest rates, while investment growth
(loss) in mutual funds results from dividends plus a net increase (decrease) in
the market value of securities in the fund.
Participants may change their investment options daily.
Participant Withdrawals and Terminations - The full value of a participant's
ERSP account is distributed through a lump-sum cash payment to the employee or
designated beneficiary upon retirement, termination of employment or death, for
account balances less than $3,500. Distributions of participant account
balances greater than $3,500 are based on participant elections in accordance
with the Plan provisions.
As the Plan is primarily designed to meet long-term financial needs, employees
may permanently withdraw amounts from their accounts only under the terms of
the Plan's financial hardship withdrawal guidelines. Additionally,
participants may withdraw all or a portion of the value of their after-tax
contributions, however, this withdrawal is limited to once per Plan year.
Participant Notes Receivable - Participant may borrow from their fund accounts
up to a maximum of 50% of their account balance or $50,000 reduced by the
highest outstanding loan balance over the past 12 months. Loans are repayable
monthly over periods not to exceed 5 years. The interest rate charged on
participant loans is fixed at the beginning of each loan at prime rate at
Firstar Bank plus 1%.
Plan Termination - Although it has not expressed any intent to do so, the
Company has the right under the Plan to discontinue its contributions at any
time and to terminate the Plan subject to the provisions of ERISA. In the
event of Plan termination, participants will become 100 percent vested in their
accounts.
Tax Status - The Internal Revenue Service has determined and informed the
Company by a letter dated September 21, 1995, that the Plan and related trust
are designed in accordance with applicable sections of the IRC. The Plan has
been amended since receiving the determination letter. However, the Plan
administrator and the Plan's tax counsel believe that the Plan is designed and
is currently being operated in compliance with the applicable requirements of
the IRC.
Administration - A trustee is utilized in connection with the operation of the
Plan. The Chief Financial Officer and Treasurer of WEC serves as the Plan
Administrator.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
- ----------------------------------------
Basis of Accounting - The Plan's financial statements are prepared on the
accrual basis of accounting.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Investment Valuation - The assets of the Plan are stated at fair value. The
assets within the Blended Rate Income Fund are guaranteed investment contracts
which are stated at contract value, which approximates fair value. Contract
value represents contributions made under the contract, plus interest at the
contract rate, less participant withdrawals. The other investments are stated
at fair value based on the quoted asset values on the last day of the Plan
year.
Income Recognition - Assets are recorded at market value and the Statements of
Changes in Net Assets Available for Benefits with fund information include
recognition of net unrealized appreciation or depreciation for the year on
assets held at year-end. Net unrealized appreciation or depreciation of
investments fluctuates based upon the market price of investments held.
Realized gains and losses are calculated in accordance with the Department of
Labor regulations. Under these regulations, realized gains and losses are
calculated as sale proceeds less the carrying value of the investment at the
beginning of the year or acquisition cost if acquired during the year. The
carrying value of the investment is calculated at each year-end, whereby the
original cost of the investment is adjusted to market value.
Interest and dividends are recorded as earned.
Payments of Benefits - Benefits are recorded when paid.
Expenses of the Plan - All significant administrative expenses are paid by the
Company, except for loan origination fees which are paid by the borrowing
participant and charged against the fund from which the borrowings are made.
Reclassifications - Certain reclassifications have been made to the
December 31, 1996 financial statements to conform to the current year
presentation.
NOTE 3 - PLAN TRANSFERS
- -----------------------
Effective January 1, 1997 the Company amended the WE Represented Employee
Savings Plan ("Former Plan") to allow for the assets of the WE Management
Employee Savings Plan ("MESP") to be merged into the Former Plan.
Additionally, upon amendment, the name of the Former Plan was changed to the WE
Employee Retirement Savings Plan. During 1997, the Company merged $159,141,486
of MESP assets into the Former Plan.
During the year ended December 31, 1996, $551,831 was transferred to MESP from
the Former Plan.
NOTE 4 - AMOUNTS ALLOCATED TO WITHDRAWN PARTICIPANTS
- ----------------------------------------------------
Plan assets of $78,683,835 and $25,786,397 have been allocated to the accounts
of persons who are no longer active participants of the Plan as of December 31,
1997 and 1996, respectively. The following is a summary of the amounts
allocated to withdrawn participants:
December 31,
-------------
1997 1996
---- ----
Blended Rate Income Fund $19,352,099 $ 6,872,326
WEC Common Stock Fund 20,218,171 11,773,958
Fidelity Equity Income Fund 15,035,540 3,065,689
Fidelity Growth Company Fund 9,133,048 1,451,352
Fidelity US Equity Index Commingled Pool 8,064,550 1,470,560
Fidelity Balanced Fund 1,815,377 391,319
Fidelity Retirement Government Money
Market Portfolio 577,606 244,115
Fidelity US Bond Index Portfolio 824,926 78,669
Fidelity Overseas Fund 1,871,773 411,632
Fidelity Low-Priced Stock Fund 1,790,745 26,777
----------- -----------
$78,683,835 $25,786,397
=========== ===========
WISCONSIN ELECTRIC POWER COMPANY
--------------------------------
EMPLOYEE RETIREMENT SAVINGS PLAN
--------------------------------
I. ITEM 27a - Schedule of Assets Held for Investment Purposes
-------------------------------------------------------------
As of December 31, 1997
-----------------------
(a) (b) (c) (d)
Description of investment including
Identity of issue, borrower, maturity date, rate of interest,
lessor, or similar party collateral, par or maturity value Cost Current Value
---------------------------------------------- ------------------------------------- ------------- -------------
Blended Rate Income Fund Collective trust fund $57,771,773 $ 57,771,773
WEC Common Stock Fund (1) Common stock 58,284,283 101,877,660
Fidelity Equity Income Fund Mutual/pooled fund 60,037,308 70,115,105
Fidelity Growth Company Fund Mutual/pooled fund 49,025,621 50,839,073
Fidelity U.S. Equity Index Commingled Pool Mutual/pooled fund 30,724,048 39,381,423
Fidelity Balanced Fund Mutual/pooled fund 10,051,342 10,283,658
Fidelity Retirement Government Money Market
Portfolio Mutual/pooled fund 2,541,425 2,541,425
Fidelity U.S. Bond Index Portfolio Mutual/pooled fund 3,931,436 4,008,540
Fidelity Overseas Fund Mutual/pooled fund 13,940,928 13,648,013
Fidelity Low-Priced Stock Fund Mutual/pooled fund 15,179,374 15,810,049
Loan Fund (2) Participant notes receivable 7,341,361 7,341,361
(1) Denotes party-in-interest.
(2) There were 1,291 outstanding loans to participants at December 31, 1997, with varied maturities of up to 5 years.
Interest rates range between approximately 7% and 10%.
/TABLE
WISCONSIN ELECTRIC POWER COMPANY
--------------------------------
EMPLOYEE RETIREMENT SAVINGS PLAN
--------------------------------
II. Item 27d - Schedule of Reportable Transactions
--------------------------------------------------
For the Year Ended December 31, 1997
------------------------------------
(f) (h)
Expense Current value
(a) (b) (c) (d) (e) incurred (g) of asset on (i)
Identity of party Description Purchase Selling Lease with Cost of transaction Net gain
involved of Asset Price Price rental transaction Asset date or (loss)
- ----------------- ------------------------ ---------- ---------- ------ ----------- ---------- ------------- ---------
Fidelity Blended Rate Income Fund
233 purchases $52,951,458 $0 N/A None $52,951,458 $52,951,458 $0
240 sales 0 $17,851,295 N/A None 17,851,295 17,851,295 0
Wisconsin Energy WEC Common Stock Fund
Corporation
252 purchases 51,626,083 0 N/A None 51,626,083 51,626,083 0
252 sales 0 28,317,401 N/A None 20,447,515 28,317,401 7,869,886
Fidelity Equity Income Fund
247 purchases 51,747,770 0 N/A None 51,747,770 51,747,770 0
209 sales 0 6,725,834 N/A None 6,164,853 6,725,834 560,981
Fidelity Growth Company Fund
242 purchases 42,683,580 0 N/A None 42,683,580 42,683,580 0
204 sales 0 7,617,135 N/A None 7,084,706 7,617,135 532,429
Fidelity Overseas Fund
230 purchases 15,573,880 0 N/A None 15,573,880 15,573,880 0
170 Sales 0 5,973,898 N/A None 5,870,088 5,973,898 103,810
Fidelity Balanced Fund
199 purchases 8,720,138 0 N/A None 8,720,138 8,720,138 0
125 Sales 0 1,216,566 N/A None 1,147,190 1,216,566 69,376
Fidelity Low-Price Stock Fund
240 purchases 15,446,517 0 N/A None 15,446,517 15,446,517 0
92 sales 0 732,373 N/A None 678,217 732,373 54,156
Fidelity U.S. Equity Index
230 purchases Commingled Pool 26,708,803 0 N/A None 26,708,803 26,708,803 0
170 sales 0 2,576,336 N/A None 2,183,254 2,576,336 393,082
/TABLE
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements listed below of Wisconsin Energy Corporation of our report dated
June 23, 1998 appearing in this Exhibit 99.1 filed with Amendment No. 1 (on
Form 10-K/A) to the Wisconsin Energy Corporation December 31, 1997 Form 10-K.
1. Registration Statement on Form S-8 (Registration No. 33-62159) - Wisconsin
Electric Represented Employee Savings Plan.
2. Registration Statement on Form S-8 (Registration No. 33-62157) - Wisconsin
Electric Management Employee Savings Plan.
/s/ Price Waterhouse LLP
- ---------------------------------
PRICE WATERHOUSE LLP
Milwaukee, Wisconsin
June 26, 1998