01—Abstract
Summary
Summary of the 10-K filed March 30, 1995. Cited figures are marked; the original filing is the authoritative source.
Wisconsin Energy Corporation, the holding company for Wisconsin Electric Power Company and Wisconsin Natural Gas Company, reported 1994 net income of $180.9 milliona, or $1.67 per share, down from $190.1 million, or $1.80 per share, in 1993.
Results include a non-recurring $73.9 millionb revitalization charge taken in the first quarter of 1994 ($45 million net of tax, or 42 cents a share). Excluding that charge, earnings per share were $2.09, a 16.1 percent increase over 1993. Total operating revenues were $1.74 billion, with electric revenues of $1.40 billion and gas revenues of $324.3 million.
Electric kilowatt-hour sales rose 4.8 percent, driven by warmer summer weather and economic activity, and a 5.7 percent reduction in non-fuel operation and maintenance expenses was cited. The company is restructuring its utility operations under a "revitalization" program, with 403 employees electing early retirement and 651 enrolling in severance packages. Management expects the restructuring charge to be offset by operation and maintenance savings by the end of 1995, and plans to merge Wisconsin Natural into Wisconsin Electric by year-end 1995.
Capital requirements for the utility subsidiaries for 1995-1999 total $291 millionc in 1995 and $315 million in 1999, with construction spending estimated at $248 million in 1995 declining to $174 million in 1999. Key risks include regulatory uncertainty, as the Public Service Commission of Wisconsin is investigating possible fundamental changes to the state's electric utility industry, and a pending decision on replacing the Point Beach Unit 2 steam generators estimated at $119 million.
The company also reports a $70 milliond expenditure on the Kimberly cogeneration facility, whose future is under evaluation after the PSCW selected an independent power producer project. Total assets were $4.41 billion at December 31, 1994.
02—Key points
Key Highlights
- Net income of $180.9 million ($1.67 per share) in 1994, versus $190.1 million ($1.80 per share) in 1993
- Excluding the $73.9 million revitalization charge, earnings per share were $2.09, up 16.1 percent from 1993
- Electric kilowatt-hour sales increased 4.8 percent to 26.9 billion kWh; wholesale resale sales rose 19.3 percent
- Total operating revenues of $1.74 billion; electric $1.40 billion, gas $324.3 million, steam $14.3 million
- Revitalization program: 403 employees elected early retirement and 651 enrolled in severance packages; savings expected to offset the charge by end of 1995
- Planned 1995-1999 utility capital requirements of $291 million in 1995 rising to $398 million in 1997, with construction of $248 million in 1995
- Capital structure at year-end 1994: common equity 52.2 percent, long-term debt 39.4 percent, short-term debt 7.5 percent, preferred stock 0.9 percent
03—Questions
Frequently Asked Questions
Why did earnings per share decline in 1994?
The decline was driven by a non-recurring $73.9 million charge ($45 million net of tax, or 42 cents a share) for the company's organizational restructuring program, which covers severance and early retirement packages. Excluding this charge, earnings per share were $2.09, up 16.1 percent from $1.80 in 1993.
What drove the growth in electric sales?
Electric sales rose 4.8 percent, attributed to warmer summer weather in 1994, additional economic activity in the service area, colder winter weather in the first quarter, and increased sales to the Empire and Tilden iron ore mines, which were 15.0 percent higher following a five-week strike in 1993.
What is the status of the proposed merger of Wisconsin Natural into Wisconsin Electric?
Wisconsin Electric and Wisconsin Natural filed a joint application with the PSCW on October 11, 1994. The merger, approved by Wisconsin Electric stockholders in December 1994, is anticipated to be effective by year-end 1995, subject to regulatory and other approvals that both are expected to receive by then.
What regulatory uncertainties could affect the company?
The PSCW is investigating the state's electric utility industry and has said the investigation may result in profound and fundamental changes to its structure and regulation, with a final report expected to the Wisconsin Legislature in late 1995. The company also cannot predict whether regulatory asset and liability adjustments may be required under SFAS No. 71 if rates move away from original cost-based recovery.
What major capital projects are planned?
The company is completing the 300 megawatt Paris Generating Station, estimated at $104 million and expected in service in summer 1995. Wisconsin Electric also awaits a decision on replacing the Point Beach Unit 2 steam generators, estimated at $119 million, with a final order expected in early 1996. Dry cask spent fuel storage at Point Beach, estimated at $6.5 million, has been approved but is subject to pending judicial review petitions.
04—Continue