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Wec Energy Group Annual Report, Year Ended Dec 31, 2000

Filing Date
Filed March 23, 2001
Period End
December 31, 2000
Security
WEC
In the record · 2016–202610-K1110-Q338-K260

WEC filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 260 current reports (8-K) between 2016 and 2026.

  1. FY2018 annual report10-K · Feb ’19Feb ’19
  2. Leadership change8-K · Jan ’22Jan ’22
  3. Leadership change8-K · Dec ’25Dec ’25

01—Abstract

Summary

Summary of the 10-K filed March 23, 2001. Cited figures are marked; the original filing is the authoritative source.

Wisconsin Energy Corporation (now WEC Energy Group, Inc.) reported a 2000 year in which the April 26, 2000 acquisition of WICOR, Inc. transformed the company into a three-segment holding company: utility energy, non-utility energy and manufacturing.

Total operating revenues rose to $3,354.7 milliona from $2,272.6 million, and net income fell to $154.2 million from $209.0 million. Diluted earnings per share were $1.27 versus $1.79, while earnings before non-recurring items were $1.51 per share versus $1.88. The filing attributes the decline to WICOR merger costs of $0.41 per share, $0.69 per share of December 2000 non-recurring charges, partly offset by a $0.45 per share gain on the SkyGen sale, along with higher fuel and purchased power costs and cooler summer weather.

The company is pursuing a "Power the Future" strategy, described as a 10-year, $7 billionb program to add at least 2,800 megawatts of new gas- and coal-fired capacity, to be leased back to Wisconsin Electric. Management is also divesting non-core assets: the two Connecticut power plants are under contract for expected gross proceeds of about $350 million, with closing expected in the second quarter of 2001, and about 80% of the Wispark real estate portfolio is slated for sale. For 2001, diluted EPS is forecast at $2.00 to $2.25, and capital expenditures are estimated at $715.0 million.

Balance sheet and financing pressures are significant. Total assets grew to $8,406.1 millionc from $6,061.8 million, and short-term debt rose to $1,386.1 million from $507.5 million, largely to fund the $1.2 billion WICOR purchase.

The dividend was cut to $0.20d per quarter from $0.39 beginning in December 2000, and Moody's lowered the company's issuer rating to A2 from A1. Investors should weigh the expected 2001 earnings recovery and asset sale proceeds against the leverage, the regulatory and litigation risks (including the $100 million punitive damages verdict under appeal), and the company's exposure to natural gas price increases.

02—Key points

Key Highlights

  1. Net income was $154.2 million ($1.27 diluted EPS) in 2000, down from $209.0 million ($1.79) in 1999, after non-recurring items and WICOR merger costs.
  2. Total operating revenues were $3,354.7 million, up from $2,272.6 million, reflecting the WICOR acquisition completed April 26, 2000.
  3. The WICOR acquisition cost approximately $1.2 billion in cash and was funded largely with commercial paper, which pushed short-term debt to $1,386.1 million.
  4. The quarterly dividend was reduced to $0.20 per share from $0.39, with management citing reinvestment in core businesses and debt reduction.
  5. The 'Power the Future' strategy targets at least 2,800 MW of new generating capacity, with an estimated total investment of about $7 billion over ten years.
  6. 2001 guidance calls for diluted EPS of $2.00 to $2.25, and capital expenditures of $715.0 million are planned.
  7. A $100 million punitive damages jury verdict (Giddings & Lewis/City of West Allis) is under appeal, and no reserve has been established for it.

03—Questions

Frequently Asked Questions

  1. Why did earnings decline in 2000?

    The filing attributes the decline to WICOR merger-related costs of $0.41 per share, $0.69 per share of non-recurring charges recorded in December 2000, higher fuel and purchased power costs, and cooler summer weather. These were partly offset by a $0.45 per share gain on the sale of the SkyGen interest.

  2. What is the outlook for 2001?

    Diluted earnings per share are expected to be between $2.00 and $2.25, reflecting a full year of WICOR contributions and merger synergies. Wisconsin Electric also expects approximately $35 million in pre-tax synergies during 2001.

  3. What asset sales are planned?

    The two Connecticut power plants are under an agreement for anticipated gross proceeds of about $350 million, with closing expected by the end of the second quarter of 2001. Management also plans to sell about 80% of the Wispark real estate portfolio over the following 12 to 18 months and expects to receive about $500 million of net asset sale proceeds in 2001.

  4. Why was the dividend cut?

    Management said the reduced dividend, now $0.20 per quarter, would allow the company to reinvest in core business areas, reduce debt and lower borrowing costs, thereby increasing its overall financial strength.

  5. What are the main legal and regulatory risks?

    The most significant is the Giddings & Lewis/City of West Allis verdict of $4.5 million in compensatory damages and $100 million in punitive damages, which Wisconsin Electric is appealing and for which no reserve has been established. Other risks include the pending PSCW review of fuel rules, the Power the Future regulatory approvals, and the Department of Energy's failure to begin removing used nuclear fuel from Point Beach.

04—Continue

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