UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2000
Commission Registrant; State of Incorporation IRS Employer
File Number Address; and Telephone Number Identification No.
----------- ---------------------------------- ------------------
001-09057 WISCONSIN ENERGY CORPORATION 39-1391525
(A Wisconsin Corporation)
231 West Michigan Street
P.O. Box 2949
Milwaukee, WI 53201
(414) 221-2345
001-01245 WISCONSIN ELECTRIC POWER COMPANY 39-0476280
(A Wisconsin Corporation)
231 West Michigan Street
P.O. Box 2046
Milwaukee, WI 53201
(414) 221-2345
Indicate by check mark whether each 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 each 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
Registrant's classes of common stock, as of the latest
practicable date (May 5, 2000):
Wisconsin Energy Corporation Common Stock, $.01 Par Value,
120,451,611 shares
outstanding.
Wisconsin Electric Power Company Common Stock, $10 Par Value,
33,289,327 shares outstanding.
Wisconsin Energy Corporation
is the sole holder of
Wisconsin Electric Power
Company Common Stock.
<TABLE>
<CAPTION>
WISCONSIN ENERGY CORPORATION
WISCONSIN ELECTRIC POWER COMPANY
--------------------------------
FORM 10-Q REPORT FOR THE QUARTER ENDED MARCH 31, 2000
TABLE OF CONTENTS
<S> <C>
Item Page
- ---- ----
Introduction...............................................................
Part I - Financial Information
------------------------------
1. Financial Statements
Wisconsin Energy
Consolidated Condensed Income Statement................................
Consolidated Condensed Balance Sheet...................................
Consolidated Statement of Cash Flows...................................
Wisconsin Electric
Condensed Income Statement.............................................
Condensed Balance Sheet................................................
Statement of Cash Flows................................................
Notes to Financial Statement of
Wisconsin Energy and Wisconsin Electric................................
2. Management's Discussion and Analysis of Financial Conditions and Results
of Operations for Wisconsin Energy and Wisconsin Electric................
3. Quantitative and Qualitative Disclosures About Market Risk.................
Part II - Other Information
---------------------------
1. Legal Proceedings..........................................................
6. Exhibits and Reports on Form 8-K...........................................
Signatures.................................................................
</TABLE>
INTRODUCTION
Wisconsin Energy Corporation ("Wisconsin Energy" or the
"Company") is a holding company whose principal subsidiary as of
March 31, 2000 is Wisconsin Electric Power Company ("Wisconsin
Electric"), an electric, gas and steam utility. Unless qualified
by its context when used in this combined Form 10-Q, Wisconsin
Energy refers to the holding company and all of its subsidiaries.
The unaudited interim financial statements presented in this
combined Form 10-Q report include the consolidated statements of
Wisconsin Energy as well as separate statements for Wisconsin
Electric. These unaudited statements have been prepared by
Wisconsin Energy and Wisconsin Electric pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. The Wisconsin Energy and
Wisconsin Electric financial statements should be read in
conjunction with the financial statements and notes thereto
included in the companies' combined Annual Report on Form 10-K
for the year ended December 31, 1999. This combined Form 10-Q is
separately filed by Wisconsin Energy and Wisconsin Electric.
Information contained herein relating to any individual
registrant is filed by such registrant on its own behalf.
PART 1 - FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
WISCONSIN ENERGY CORPORATION
CONSOLIDATED CONDENSED INCOME STATEMENT
(Unaudited)
Three Months Ended March 31
---------------------------
2000 1999
----------- ---------
(Thousands of Dollars, Except Per Share Amounts)
<S> <C> <C>
Operating Revenues $627,750 $556,717
Operating Expenses
Fuel 94,553 70,735
Purchased power 65,779 49,660
Cost of gas sold 69,292 68,860
Other operation and maintenance 185,140 182,466
Depreciation and amortization 103,660 66,956
Property and revenue tax 20,727 17,724
-------- --------
Total Operating Expenses 539,151 456,401
-------- --------
Pretax Operating Income 88,599 100,316
Other Income and Deductions
Interest income 6,789 8,349
Allowance for other funds
used during construction 862 984
Other 29,741 4,446
-------- --------
Total Other Income and Deductions 37,392 13,779
Interest Charges and Other
Interest expense 42,543 33,566
Allowance for borrowed funds
used during construction (3,099) (1,900)
Distributions on preferred
securities of subsidiary trust 3,425 228
Preferred dividend
requirement of subsidiary 301 301
-------- --------
Total Interest Charges and Other 43,170 32,195
-------- --------
Income Before Income Taxes 82,821 81,900
Income Taxes 32,227 28,389
-------- --------
Net Income $50,594 $53,511
======== ========
Average Number of Shares of Common
Stock Outstanding (Thousands) 119,512 115,926
Earnings Per Share of Common
Stock (Basic and Diluted) $0.42 $0.46
Dividends Per Share of Common Stock $0.39 $0.39
<FN>
The accompanying notes, as they relate to Wisconsin Energy Corporation, are an integral
part of these financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
WISCONSIN ENERGY CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEET
(Unaudited)
March 31, 2000 December 31, 1999
-------------- -----------------
(Thousands of Dollars)
<S> <C> <C>
Assets
------
Property, Plant and Equipment
Electric utility $5,203,975 $5,153,388
Gas utility 557,212 552,405
Steam utility 63,935 63,461
Common utility 392,920 391,793
Energy non-utility 207,316 198,954
Other property 368,042 351,057
Accumulated provision for depreciation (3,335,613) (3,249,978)
---------- ----------
3,457,787 3,461,080
Construction work in progress 223,168 174,778
Leased facilities - net 125,907 127,327
Nuclear fuel - net 82,850 83,393
---------- ----------
Net Property, Plant and Equipment 3,889,712 3,846,578
Investments 969,921 950,322
Current Assets
Cash and cash equivalents 24,746 73,477
Accounts receivable 271,529 242,348
Accrued utility revenues 94,636 134,566
Materials, supplies and fossil fuel 196,051 231,615
Prepayments and other assets 99,487 123,865
---------- ----------
Total Current Assets 686,449 805,871
Deferred Charges and Other Assets
Accumulated deferred income taxes 199,832 197,988
Other 452,102 432,361
---------- ----------
Total Deferred Charges and Other Assets 651,934 630,349
---------- ----------
Total Assets $6,198,016 $6,233,120
========== ==========
Capitalization and Liabilities
------------------------------
Capitalization
Common stock $862,627 $839,497
Retained earnings 1,174,830 1,170,765
Unearned compensation - restricted stock award (2,472) (2,518)
---------- ----------
Total Common Stock Equity 2,034,985 2,007,744
Preferred stock 30,450 30,450
Company-obligated, mandatorily redeemable
preferred securities of subsidiary trust
holding solely debentures of the Company 200,000 200,000
Long-term debt 2,135,505 2,134,636
---------- ----------
Total Capitalization 4,400,940 4,372,830
Current Liabilities
Long-term debt due currently 69,339 69,085
Short-term debt 370,285 507,500
Accounts payable 191,196 174,043
Accrued liabilities 151,469 99,666
Other 48,921 48,273
---------- ----------
Total Current Liabilities 831,210 898,567
Deferred Credits and Other Liabilities
Accumulated deferred income taxes 624,325 624,864
Other 341,541 336,859
---------- ----------
Total Deferred Credits and Other Liabilities 965,866 961,723
---------- ----------
Total Capitalization and Liabilities $6,198,016 $6,233,120
========== ==========
<FN>
The accompanying notes, as they relate to Wisconsin Energy Corporation, are an integral
part of these financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
WISCONSIN ENERGY CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Three Months Ended March 31
---------------------------
2000 1999
----------- -----------
(Thousands of Dollars)
<S> <C> <C>
Operating Activities
Net income $50,594 $53,511
Reconciliation to cash
Depreciation and amortization 103,660 66,956
Nuclear fuel expense - amortization 7,160 4,718
Conservation expense - amortization 1,407 5,625
Debt premium, discount
and expense - amortization 1,195 762
Deferred income taxes - net (2,501) (2,786)
Investment tax credit - net (1,143) (1,148)
Allowance for other funds
used during construction (862) (984)
Change in - Accounts receivable (29,181) (18,361)
Inventories 35,564 26,647
Other current assets 64,308 28,712
Accounts payable 17,153 (47,556)
Other current liabilities 52,451 58,283
Other (6,791) (21,683)
-------- --------
Cash Provided by Operating Activities 293,014 152,696
Investing Activities
Construction expenditures (134,963) (105,967)
Allowance for borrowed funds
used during construction (3,099) (1,900)
Nuclear fuel (10,594) (6,306)
Nuclear decommissioning trust (36,013) (8,163)
Other 3,547 (1,365)
-------- --------
Cash Used in Investing Activities (181,122) (123,701)
Financing Activities
Sale of - Common stock 23,130 18,711
Long-term debt 15,539 31,482
Mandatorily redeemable trust
preferred securities - 200,000
Retirement of long-term debt (15,548) (11,821)
Change in short-term debt (137,215) (119,919)
Dividends on stock - Common (46,529) (45,169)
-------- --------
Cash Provided by (Used in) Financing Activities (160,623) 73,284
-------- --------
Change in Cash and Cash Equivalents (48,731) 102,279
Cash and Cash Equivalents at Beginning of Period 73,477 16,603
-------- --------
Cash and Cash Equivalents at End of Period $24,746 $118,882
======== ========
Supplemental Information -
Cash Paid (Received) For
Interest (net of amount capitalized) $31,207 $25,425
Income taxes (25,855) 14,649
<FN>
The accompanying notes, as they relate to Wisconsin Energy Corporation, are an integral
part of these financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
WISCONSIN ELECTRIC POWER COMPANY
CONDENSED INCOME STATEMENT
(Unaudited)
Three Months Ended March 31
---------------------------------
2000 1999
----------- -----------
(Thousands of Dollars)
<S> <C> <C>
Operating Revenues $540,778 $527,839
Operating Expenses
Fuel 75,272 70,735
Purchase power 30,105 31,053
Cost of gas sold 69,292 68,860
Other operation and maintenance 160,772 173,452
Depreciation and amortization 98,099 64,450
Property and revenue tax 17,445 16,831
-------- --------
Total Operating Expenses 450,985 425,381
-------- --------
Pretax Operating Income 89,793 102,458
Other Income and Deductions
Interest income 3,047 5,672
Allowance for other funds
used during construction 862 984
Other 31,213 5,524
-------- --------
Total Other Income and Deductions 35,122 12,180
Interest Charges
Interest expense 29,248 28,397
Allowance for borrowed funds
used during construction (423) (481)
-------- --------
Total Interest Charges 28,825 27,916
-------- --------
Income Before Income Taxes 96,090 86,722
Income Taxes 37,251 30,761
-------- --------
Net Income 58,839 55,961
Preferred Stock Dividend Requirement 301 301
-------- --------
Earnings Available for Common
Stockholder $58,538 $55,660
======== ========
<FN>
Note: Earnings and dividends per share of common stock are not applicable because all of
Wisconsin Electric Power Company's common stock is owned by Wisconsin Energy
Corporation.
The accompanying notes, as they relate to Wisconsin Electric Power Company, are an
integral part of these financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
WISCONSIN ELECTRIC POWER COMPANY
CONDENSED BALANCE SHEET
(Unaudited)
March 31, 2000 December 31, 1999
-------------- -----------------
(Thousands of Dollars)
<S> <C> <C>
Assets
------
Property, Plant and Equipment
Electric utility $5,120,834 $5,070,246
Gas utility 557,212 552,405
Steam utility 63,935 63,461
Common utility 392,920 391,793
Other property 7,778 7,581
Accumulated provision for depreciation (3,270,544) (3,189,890)
---------- ----------
2,872,135 2,895,596
Construction work in progress 122,876 99,002
Leased facilities - net 125,907 127,327
Nuclear fuel - net 82,850 83,393
---------- ----------
Net Property, Plant and Equipment 3,203,768 3,205,318
Investments 689,233 663,776
Current Assets
Cash and cash equivalents 6,859 49,852
Accounts receivable 180,467 166,651
Accrued utility revenues 93,654 133,422
Materials, supplies and fossil fuel 167,473 197,221
Prepayments and other assets 63,694 98,802
---------- ----------
Total Current Assets 512,147 645,948
Deferred Charges and Other Assets
Accumulated deferred income taxes 189,997 188,192
Other 363,561 349,369
---------- ----------
Total Deferred Charges and Other Assets 553,558 537,561
---------- ----------
Total Assets $4,958,706 $5,052,603
========== ==========
Capitalization and Liabilities
------------------------------
Capitalization
Common stock $863,582 $863,582
Retained earnings 1,030,916 1,017,271
---------- ----------
Total Common Stock Equity 1,894,498 1,880,853
Preferred stock 30,450 30,450
Long-term debt 1,671,662 1,677,610
---------- ----------
Total Capitalization 3,596,610 3,588,913
Current Liabilities
Long-term debt due currently 30,297 30,822
Short-term debt 117,088 264,664
Accounts payable 123,068 127,108
Accrued liabilities 134,502 86,089
Other 43,341 39,677
---------- ----------
Total Current Liabilities 448,296 548,360
Deferred Credits and Other Liabilities
Accumulated deferred income taxes 609,505 610,040
Other 304,295 305,290
---------- ----------
Total Deferred Credits and Other Liabilities 913,800 915,330
---------- ----------
Total Capitalization and Liabilities $4,958,706 $5,052,603
========== ==========
<FN>
The accompanying notes, as they relate to Wisconsin Electric Power Company, are an
integral part of these financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
WISCONSIN ELCETRIC POWER COMPANY
STATEMENT OF CASH FLOWS
(Unaudited)
Three Months Ended March 31
---------------------------
2000 1999
----------- -----------
(Thousands of Dollars)
<S> <C> <C>
Operating Activities
Net income $58,839 $55,961
Reconciliation to cash
Depreciation and amortization 98,099 64,450
Nuclear fuel expense - amortization 7,160 4,718
Conservation expense - amortization 1,407 5,625
Debt premium, discount
and expense - amortization 734 656
Deferred income taxes - net (2,509) (2,794)
Investment tax credit - net (1,127) (1,132)
Allowance for other funds used
during construction (862) (984)
Change in - Accounts receivable (13,816) (22,756)
Inventories 29,748 26,649
Other current assets 74,876 32,093
Accounts payable (4,040) (42,409)
Other current liabilities 52,077 59,019
Other (5,607) (9,974)
-------- --------
Cash Provided by Operating Activities 294,979 169,122
Investing Activities
Construction expenditures (86,980) (81,432)
Allowance for borrowed funds used
during construction (423) (481)
Nuclear fuel (10,594) (6,306)
Nuclear decommissioning trust (36,013) (8,163)
Other (3,644) (4,283)
-------- --------
Cash Used in Investing Activities (137,654) (100,665)
Financing Activities
Sale of long-term debt - 29,444
Retirement of long-term debt (7,548) (7,247)
Change in short-term debt (147,576) (52,819)
Dividends on stock - Common (44,893) (44,893)
Preferred (301) (301)
-------- --------
Cash Used in Financing Activities (200,318) (75,816)
-------- --------
Change in Cash and Cash Equivalents (42,993) (7,359)
Cash and Cash Equivalents at Beginning of Period 49,852 14,183
-------- --------
Cash and Cash Equivalents at End of Period $6,859 $6,824
======== ========
Supplemental Information -
Cash Paid (Received) For
Interest (net of amount capitalized) $25,412 $26,069
Income taxes (26,013) 11,334
<FN>
The accompanying notes, as they relate to Wisconsin Electric Power Company, are an
integral part of these financial statements.
</FN>
</TABLE>
WISCONSIN ENERGY CORPORATION
WISCONSIN ELECTRIC POWER COMPANY
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. The accompanying unaudited consolidated financial statements
for Wisconsin Energy Corporation and the unaudited financial
statements for Wisconsin Electric Power Company should be read in
conjunction with the companies' combined 1999 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 Wisconsin Energy
and Wisconsin Electric, have been included in the accompanying
income statements and balance sheets. The results of operations
for the three months ended March 31, 2000 are not necessarily
indicative, however, of the results which may be expected for the
year 2000 because of seasonal and other factors.
2. Due primarily to acquisitions during 1999 by Wisconsin Energy
that increased the size of Wisconsin Energy's non-utility
operations and assets, Wisconsin Energy and Wisconsin Electric
modified their income statement and balance sheet presentations
effective with the second quarter of 1999. Prior year financial
statements have been reclassified to reflect the new
presentation.
3. On April 26, 2000, Wisconsin Energy acquired WICOR, Inc.
(with its subsidiaries, "WICOR") through the merger of an
acquisition subsidiary of Wisconsin Energy into WICOR in which
each outstanding share of WICOR common stock (except shares of
restricted stock) was converted into the right to receive $31.50
in cash. WICOR is a diversified holding company with two
principal business groups: energy services and pump
manufacturing. The business combination was effected through the
payment of approximately $1.2 billion in cash, including related
fees and expenses. Approximately $300 million of WICOR debt
remained outstanding following the acquisition. In addition,
WICOR's unexercised equity-based compensation awards outstanding
at the effective time of the merger were converted into 57,745
shares of restricted Wisconsin Energy common stock, into options
for up to 4,619,969 shares of Wisconsin Energy common stock with
a weighted average exercise price of $13.691 per share, and into
deferred stock units payable in 105,520 shares of Wisconsin
Energy common stock. The acquisition was funded through the
issuance of commercial paper in the institutional private
placement market and will be accounted for as a purchase.
Accordingly, the purchase price will be allocated to the acquired
assets and assumed liabilities based upon their fair value, and
the estimated total cost in excess of net assets will be
reflected as goodwill and amortized over 40 years. The
consolidated financial statements of the Company will reflect
the business combination and WICOR's financial results from and
after the date of acquisition.
For additional information related to the acquisition of
WICOR, see Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations - "Factors
Affecting Results of Operations" and "Liquidity and Capital
Resources" in Part I of this report.
4. During the first three months of 2000, Wispark Corporation, a
wholly-owned subsidiary of Wisconsin Energy, secured
$15.5 million of bank financing in the form of adjustable rate
mortgage notes due 2000-2003 to finance the construction or
purchase of various facilities.
5. WISCONSIN ENERGY: Wisconsin Energy, a holding company with
subsidiaries in utility and non-utility businesses, has two
reportable operating segments: a utility energy and a non-utility
energy segment.
The reportable utility energy segment includes Wisconsin
Energy's two utility subsidiaries, Wisconsin Electric Power
Company and Edison Sault Electric Company. This segment
derives its revenues from electric, gas and steam operations.
Electric operations engage in the generation, transmission,
distribution and sale of electric energy in southeastern
(including Metropolitan Milwaukee), east central and northern
Wisconsin and in the Upper Peninsula of Michigan. Gas
operations engage in the purchase, distribution and sale of
natural gas to retail customers and the transportation of
customer-owned gas in four service areas in southeastern,
east central, western and northern Wisconsin. Steam
operations engage in the production, distribution and sale of
steam to space heating and processing customers in the
Milwaukee, Wisconsin area.
The reportable non-utility energy segment derives its
revenues primarily from energy activities including
independent power production and energy marketing, services
and trading.
The following table summarizes the reportable operating
segments of Wisconsin Energy for the three month periods
ended March 31.
<TABLE>
<CAPTION>
Energy
---------------------------------------
Wisconsin Energy
Corporation Utility Non-Utility Subtotal Other (a) Total
- ---------------- ----------- ----------- ---------- ----------- ----------
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
March 31, 2000
--------------
Three Months Ended
Operating Revenues $549,722 $69,073 $618,795 $8,955 $627,750
Pretax Operating
Income (Loss) (b) 91,400 (1,898) 89,502 (903) 88,599
March 31, 1999
--------------
Three Months Ended
Operating Revenues $536,720 $14,039 $550,759 $5,958 $556,717
Pretax Operating
Income (Loss) (b) 104,316 (3,981) 100,335 (19) 100,316
<FN>
(a) Other includes non-utility real estate investment and development and non-utility
investments in recycling technology.
(b) Interest income and interest expense are not included in segment pretax operating
income.
</FN>
</TABLE>
WISCONSIN ELECTRIC: Wisconsin Electric, Wisconsin Energy's
principal subsidiary, has organized its operating segments
according to how it is currently regulated. Wisconsin
Electric's reportable operating segments include electric,
gas and steam utility segments. The following table
summarizes the reportable operating segments of Wisconsin
Electric for the three month periods ended March 31.
<TABLE>
<CAPTION>
Wisconsin Electric
Power Company Electric Gas Steam Total
- ------------------ --------- --------- --------- ---------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
March 31, 2000
--------------
Three Months Ended
Operating Revenues (a) $414,890 $118,457 $7,431 $540,778
Pretax Operating
Income (b) 65,766 21,826 2,201 89,793
March 31, 1999
--------------
Three Months Ended
Operating Revenues (a) $397,674 $121,983 $8,182 $527,839
Pretax Operating
Income (b) 72,520 27,270 2,668 102,458
<FN>
(a) Wisconsin Electric accounts for intersegment revenues at tariff rates
established by the Public Service Commission of Wisconsin. Intersegment
revenues are not material.
(b) Interest income and interest expense are not included in segment pretax
operating income.
</FN>
</TABLE>
6. In July 1999, a jury decided against Wisconsin Electric and
awarded the plaintiffs $4.5 million as actual damages and
$100 million in punitive damages in a lawsuit alleging that
Wisconsin Electric had placed contaminated wastes at two sites in
the City of West Allis, Wisconsin. Wisconsin Electric is
preparing to file an appeal of the case. In December 1999, in
order to stop the post-judgment accrual of interest at 12% per
annum during the pendency of the appeal, Wisconsin Electric
tendered a contested liability payment of $110 million, which is
part of "Deferred Charges and Other Assets - Other" on the
condensed balance sheets, to the Clerk of Circuit Court for
Milwaukee County representing the amount of the verdict and
accrued interest. Under Wisconsin law, the plaintiffs are liable
to Wisconsin Electric upon reversal or reduction of the judgment
for the applicable amount of the funds tendered with interest.
In further post-trial proceedings, the plaintiffs filed with
the Milwaukee County Circuit Court a motion for sanctions
based upon representations made by Wisconsin Electric during
trial that Wisconsin Electric had no insurance coverage for
the punitive damage award. On April 27, 2000, the Circuit
Court Judge issued a ruling on the matter, imposing the
following sanctions against Wisconsin Electric: (i) "judgment
in the alternative" as a sanction, thereby finding an
alternative basis upon which to sustain the $104.5 million
verdict returned by the jury; (ii) a bar against Wisconsin
Electric pursuing insurance coverage for the punitive damage
portion of the verdict; and (iii) a requirement that
Wisconsin Electric pay the plaintiffs' costs relating to the
sanctions matter. In addition to its appeal of the judgment
entered on the jury's verdict, Wisconsin Electric will also
appeal the Judge's ruling on the sanctions matter.
In the opinion of management, based in part on the advice of
legal counsel, the jury verdict was not supported by the
evidence or the law and the unprecedented award of punitive
damages of this magnitude was unwarranted and should
therefore be reversed or substantially reduced on appeal.
Management also believes that the sanctions imposed by the
Judge were not supported by the evidence or the law. As
such, Wisconsin Electric has not established a reserve for
potential damages from this suit. For further information,
see Item 1. Legal Proceedings - "Environmental Matters" in
Part II of this report.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Wisconsin Energy Corporation is a holding company whose principal
subsidiary as of March 31, 2000 is Wisconsin Electric Power
Company, an electric, gas and steam utility. Unless qualified by
their context when used in this document, the terms "Wisconsin
Energy" or the "Company" refer to the holding company and all of
its subsidiaries. During the first three months of 2000,
approximately 86% of Wisconsin Energy's consolidated operating
revenues and 101% of Wisconsin Energy's consolidated pretax
operating income were attributable to Wisconsin Electric. As of
March 31, 2000, approximately 80% of Wisconsin Energy's
consolidated total assets were attributable to Wisconsin
Electric. The following discussion and analysis of financial
condition and results of operations includes both Wisconsin
Energy and Wisconsin Electric unless otherwise stated.
See Note 2 above in Item 1. Financial Statements - "Notes to
Financial Statements" for information concerning the
reclassification of certain prior year amounts in the condensed
financial statements. See Note 3 above in Item 1. Financial
Statements - "Notes to Financial Statements" and "Factors
Affecting Results of Operations" below for information concerning
Wisconsin Energy's April 26, 2000 acquisition of WICOR, Inc.
Because this business combination will be accounted for as a
purchase and, therefore, reflected prospectively in Wisconsin
Energy's consolidated financial statements from and after the
date of the acquisition, the analysis of "Results of Operations"
below does not consider the historical operations of WICOR.
CAUTIONARY FACTORS: A number of forward-looking statements are
included in this document. When used, the terms "anticipate,"
"believe," "estimate," "expect," "objective," "plan," "possible,"
"potential," "project" and similar expressions are intended to
identify forward-looking statements. Forward-looking statements
are subject to certain risks, uncertainties and assumptions which
could cause actual results to differ materially from those that
are described, including the factors that are noted in "Factors
Affecting Results of Operations" and "Cautionary Factors" below.
RESULTS OF OPERATIONS - 2000 FIRST QUARTER
EARNINGS
During the first quarter of 2000, Wisconsin Energy's consolidated
net income and earnings per share of common stock decreased to
$50.6 million and $0.42 per share, respectively, compared with
$53.5 million and $0.46 per share, respectively, during the first
quarter of 1999. For the same periods, Wisconsin Electric's
earnings increased to $58.5 million during 2000 compared with
$55.7 million during 1999.
Between the comparative periods, a modest increase in earnings
from Wisconsin Energy's utility operations, including Wisconsin
Electric, was insufficient to offset higher net losses by
Wisconsin Energy's non-utility operations, resulting in the
decline in Wisconsin Energy's consolidated earnings. A decrease
in gas utility gross margin due to unusually warm winter weather
during the first quarter of 2000 limited the growth in earnings
from utility operations. Scheduled outages at two fossil-fueled
non-utility power plants in the state of Connecticut limited
their contribution to non-utility earnings during the first
quarter of 2000. As a result, net losses from non-utility
operations increased during the first quarter of 2000 due to
higher costs associated with financing acquisition of these two
non-utility power plants in mid-April 1999 and, to a lesser
extent, associated with the financing of other non-utility
acquisitions made within the past year.
The following table summarizes contributions to Wisconsin
Energy's consolidated earnings per share (basic and diluted) by
business segment during the comparative periods.
<TABLE>
<CAPTION>
Three Months Ended March 31
---------------------------------------
Earnings Per Share (basic & diluted)-
Wisconsin Energy 2000 1999 % Change
- ------------------------------------- -------- -------- --------
<S> <C> <C> <C>
Utility Operations $0.50 $0.49 2.0%
Non-Utility Operations
Energy (0.04) (0.03) (33.3%)
Other (0.04) 0.00 -
----- -----
Total $0.42 $0.46 (8.7%)
===== =====
</TABLE>
An analysis of the Company's utility and non-utility pretax
operating income as well as an analysis of other income and
expense items follows.
UTILITY PRETAX OPERATING INCOME
During the first quarter of 2000, Wisconsin Energy's utility
pretax operating income decreased by $12.9 million or 12.4% and
Wisconsin Electric's pretax operating income decreased by
$12.7 million or 12.4% when compared to the first quarter of
1999. For both Wisconsin Energy and Wisconsin Electric, the
positive effects of higher electric utility gross margins due to
increased electric energy sales and of lower other operation and
maintenance expenses during the first quarter of 2000 were more
than offset by the effects of a weather-related decrease in gas
utility gross margin and significantly higher depreciation and
amortization expenses.
The increase in depreciation and amortization expenses during the
first quarter of 2000 was primarily due to higher nuclear
decommissioning expenses at Wisconsin Electric. Nuclear
decommissioning expenses consist of payments to and earnings of
the nuclear decommissioning trust fund. While payments to the
nuclear decommissioning trust fund were unchanged between the
comparative periods, earnings from nuclear decommissioning trust
fund investments, consisting of interest and dividends from as
well as gains on the investments, increased by $27.9 million.
Because earnings from nuclear trust fund investments are also
recognized in "Other Income and Deductions" on the condensed
income statements, they are earnings neutral to Wisconsin
Electric and to Wisconsin Energy. Excluding the effect of
Wisconsin Electric's nuclear decommissioning trust fund earnings
on depreciation and amortization expenses, Wisconsin Energy's
utility pretax operating income grew by $15.0 million and
Wisconsin Electric's pretax operating income grew by
$15.2 million between the comparative periods.
Electric Utility Revenues, Gross Margins and Sales
WISCONSIN ENERGY: Primarily due to higher total electric
utility energy sales during the first quarter of 2000, Wisconsin
Energy's total electric operating revenues increased by
$17.3 million or 4.3% compared to the first quarter of 1999 and
gross margin on electric operating revenues (electric operating
revenues less fuel and purchased power expenses) increased by
$13.3 million or 4.4%.
<TABLE>
<CAPTION>
Three Months Ended March 31
Electric Utility Operations - ---------------------------------------
Wisconsin Energy 2000 1999 % Change
- ------------------------------ --------- -------- --------
<S> <C> <C> <C>
Electric Gross Margin ($000)
Electric Operating Revenues $423,834 $406,555 4.3%
Fuel & Purchased Power 109,687 105,720 3.8%
-------- --------
Gross Margin $314,147 $300,835 4.4%
======== ========
Total Electric Sales
(Megawatt-hours) 7,789,891 7,393,205 5.4%
</TABLE>
Further detail about Wisconsin Electric's contributions to
Wisconsin Energy's electric utility revenues, gross margins and
energy sales follows.
WISCONSIN ELECTRIC: During the first quarter of 2000, Wisconsin
Electric's total electric operating revenues increased by
$17.2 million or 4.3% compared to the first quarter of 1999 and
gross margin on electric operating revenues increased by
$13.6 million or 4.6%. Wisconsin Electric attributes this growth
in large part to higher total electric energy sales during 2000.
Gross margin on electric operating revenues also increased due to
a lower cost mix of fuel and purchased power used to meet
electric demand during the first quarter of 2000.
<TABLE>
<CAPTION>
Three Months Ended March 31
Electric Utility Operations - ---------------------------------------
Wisconsin Electric 2000 1999 % Change
- ------------------------------ -------- -------- --------
<S> <C> <C> <C>
Electric Gross Margin ($000)
Electric Operating Revenues $414,890 $397,674 4.3%
Fuel & Purchased Power 105,377 101,788 3.5%
-------- --------
Gross Margin $309,513 $295,886 4.6%
======== ========
</TABLE>
As a result of the higher total electric energy sales during the
first quarter of 2000 noted above, Wisconsin Electric's total
fuel and purchased power expenses increased by $3.6 million or
3.5% between the comparative periods. However, due to higher
availability of low cost generation from Point Beach Nuclear
Plant during the first quarter of 2000, the rate of increase in
total fuel and purchased power expenses was less than the rate of
increase in total electric energy sales as well as in total
electric operating revenues, contributing to the growth in gross
margin on electric operating revenues. During the first quarter
of 2000, Wisconsin Electric obtained 25% of its electric energy
supply from nuclear generation compared to 17% during the first
quarter of 1999.
Wisconsin Electric's total electric energy sales grew by 5.5%
between the comparative periods.
<TABLE>
<CAPTION>
Three Months Ended March 31
Electric Utility Operations - ---------------------------------------
Wisconsin Electric 2000 1999 % Change
- ------------------------------ --------- --------- --------
<S> <C> <C> <C>
Electric Sales (Megawatt-hours)
Residential 1,850,412 1,792,252 3.2%
Small Commercial/Industrial 1,986,716 1,948,435 2.0%
Large Commercial/Industrial 2,813,349 2,760,640 1.9%
Other-Retail/Municipal 363,924 309,240 17.7%
Resale-Utilities 606,810 415,499 46.0%
--------- ---------
Total Electric Sales 7,621,211 7,226,066 5.5%
========= =========
</TABLE>
Compared to the first quarter of 1999, electric energy sales at
Wisconsin Electric increased during the first quarter of 2000
primarily due to higher use per customer unrelated to weather.
Growth in the average number of customers between the comparative
periods in the residential, small commercial/industrial and other
retail/municipal customer classes also contributed to the
increase in electric energy sales. Sales to the Empire and
Tilden iron ore mines, Wisconsin Electric's two largest electric
retail customers, decreased 2.5% during the first quarter of
2000. Excluding the Empire and Tilden iron ore mines, total
electric energy sales between the comparative periods grew by
6.2% and sales to the remaining large commercial/industrial
customers grew by 3.2%. Sales for resale to other utilities
increased by 46.0% primarily due to higher opportunity sales
during the first quarter of 2000.
Gas Utility Revenues, Gross Margins and Therm Deliveries
Primarily due to a weather-related decrease in higher margin
residential and commercial/industrial retail gas sales during the
first quarter of 2000, Wisconsin Electric's gross margin on gas
operating revenues (gas operating revenues less cost of gas sold)
declined by $4.0 million or 7.5% compared to the first quarter of
1999.
<TABLE>
<CAPTION>
Three Months Ended March 31
Gas Utility Operations - ---------------------------------------
Wisconsin Electric 2000 1999 % Change
- ------------------------- -------- -------- --------
<S> <C> <C> <C>
Gas Gross Margin ($000)
Gas Operating Revenues $118,457 $121,983 (2.9%)
Cost of Gas Sold 69,292 68,860 0.6%
-------- --------
Gross Margin $49,165 $53,123 (7.5%)
======== ========
</TABLE>
Between the comparative periods, Wisconsin Electric's total
natural gas therm deliveries fell by 5.1% and total retail gas
sales fell by 9.2% due in large part to an 8.0% decrease in
retail gas sales to residential customers and a 9.3% decrease in
retail gas sales to commercial/industrial customers. Weather
sensitive residential and commercial/industrial retail sales
declined due to significantly warmer weather during the first
three months of 2000. As measured by heating degree days, the
first quarter of 2000 was 9.4% warmer than the first quarter of
1999 and 13.1% warmer than normal.
<TABLE>
<CAPTION>
Three Months Ended March 31
Gas Utility Operations - ---------------------------------------
Wisconsin Electric 2000 1999 % Change
- ------------------------- -------- -------- --------
<S> <C> <C> <C>
Gas Deliveries (000's of Therms)
Residential 139,558 151,734 (8.0%)
Commercial/Industrial 85,437 94,233 (9.3%)
Interruptible 4,187 6,613 (36.7%)
Interdepartmental 246 192 28.1%
------- -------
Total Retail Gas Sales 229,428 252,772 (9.2%)
Transported Customer - Owned Gas 109,136 108,200 0.9%
Transported - Interdepartmental 8,090 4,294 88.4%
------- -------
Total Gas Deliveries 346,654 365,266 (5.1%)
======= =======
</TABLE>
Utility Operating Expenses
OTHER OPERATION AND MAINTENANCE: Compared to the first quarter
of 1999, other operation and maintenance expenses in Wisconsin
Energy's utility business segment decreased by $12.8 million or
7.2% during the first quarter of 2000, with most of the decrease
attributable to Wisconsin Electric.
At Wisconsin Electric, the most significant changes in other
operation and maintenance expenses between the comparative
periods include a $12.0 million decline in nuclear non-fuel
expenses, a $4.0 million decline in customer account expenses and
a $3.8 million decline in customer service expenses, offset in
part by a $2.5 million increase in steam power generation
expenses, a $2.5 million increase in administrative and general
expenses and a $1.3 million increase in electric transmission
expenses.
Nuclear non-fuel expenses declined during 2000 as a result of
continued progress on various performance improvement
initiatives. During the same period, customer account expenses
declined primarily due to lower bad debt expenses and customer
service expenses declined primarily due to a change in the period
over which conservation investments are being amortized.
Between the comparative periods, steam power generation expenses
increased primarily due to a scheduled four week outage at
Wisconsin Electric's Pleasant Prairie Power Plant during the
first quarter of 2000. During the same periods, administrative
and general expenses grew in large part due to higher salary and
benefit costs incurred, and electric transmission expenses grew
primarily due to higher transmission line and transmission right
of way maintenance activities during the first quarter of 2000.
DEPRECIATION AND AMORTIZATION: During the first quarter of
2000, Wisconsin Energy's total utility depreciation and
amortization expense increased by $33.7 million compared to the
first quarter of 1999, while Wisconsin Electric's total
depreciation and amortization expense increased by $33.6 million.
Between the comparative periods, total utility depreciation and
amortization grew at both companies primarily due to the higher
nuclear decommissioning expenses at Wisconsin Electric noted
above. Also contributing to the growth in total depreciation and
amortization expenses, at the end of 1999 Wisconsin Electric
completed amortizing a credit to depreciation for pre-1991
contributions in aid of construction. During the first quarter
of 1999, depreciation expense was reduced by $5.7 million as a
result of this credit.
NON-UTILITY PRETAX OPERATING INCOME
Due to operation of the Bridgeport Harbor Station ("Bridgeport")
and the New Haven Harbor Station ("New Haven") during the first
quarter of 2000, which were acquired by Wisvest-Connecticut, LLC
in mid-April 1999, Wisconsin Energy's non-utility pretax
operating loss decreased by $1.2 million or 30.0% during the
first quarter of 2000 compared to the first quarter of 1999. In
anticipation of the 2000 summer cooling season, however, the
Bridgeport and New Haven power plants, located in the State of
Connecticut, underwent scheduled outages during the first quarter
of 2000, limiting their contribution to pretax operating income.
Bridgeport has returned to service, but the outage for New Haven
is not expected to be completed until mid-May 2000, which will
also limit its contribution to pretax operating income during the
second quarter of 2000. Wisvest-Connecticut, LLC is a wholly-
owned non-utility energy subsidiary of Wisvest Corporation, which
is in turn a wholly-owned subsidiary of Wisconsin Energy.
The following table includes a summary of Wisconsin Energy's non-
utility pretax operating losses during the comparative periods.
<TABLE>
<CAPTION>
Three Months Ended March 31
---------------------------------------
Non-Utility Operations ($000) 2000 1999 % Change
- ----------------------------- -------- -------- --------
<S> <C> <C> <C>
Operating Revenues
Independent Power Production $31,784 $ - -
Energy Marketing, Trading
& Services 31,408 14,005 124.3%
Other 14,836 5,992 147.6%
------- -------
Total Operating Revenues 78,028 19,997 290.2%
Operating Expenses
Fuel and Purchased Power 50,645 14,675 245.1%
Other 30,184 9,322 223.8%
------- -------
Total Operating Expenses 80,829 23,997 236.8%
------- -------
Pretax Operating Loss ($2,801) ($4,000) 30.0%
======= =======
</TABLE>
NON-UTILITY OPERATING REVENUES: As a result of the power plant
acquisitions noted above, non-utility energy operations realized
$31.8 million of operating revenues during the first quarter of
2000 through the sale of 838,870 megawatt-hours of electric
energy by Wisvest-Connecticut, LLC. In addition, non-utility
energy operations increased its operating revenues by
$17.4 million or 124.3% between the first quarter of 2000 and the
first quarter of 1999 as a result of a growth in energy
marketing, trading and services activities. Between the
comparative periods, other non-utility operating revenues
increased by $8.8 million or 147.6%, including $5.8 million of
additional ancillary revenues from energy activities,
$1.9 million of additional rental income from real estate
activities and $1.1 million of additional operating revenues from
recycling activities.
NON-UTILITY OPERATING EXPENSES: During the first quarter of
2000, non-utility fuel and purchased power expenses increased by
$36.0 million or 245.1% when compared to the first quarter of
1999 due to independent power production activities that began in
mid-April 1999 by Wisvest-Connecticut, LLC and to a growth in
energy marketing, trading and services activities. Other
operating expenses grew by $20.9 million or 223.8% between the
comparative periods primarily due to operation of the Bridgeport
and New Haven Harbor Stations since mid-April 1999, and, to a
lesser extent, due to additional recycling activities.
OTHER ITEMS
OTHER INCOME AND DEDUCTIONS: Compared to the three months ended
March 31, 1999, Other Income and Deductions - Other increased by
$25.3 million at Wisconsin Energy and by $25.7 million at
Wisconsin Electric primarily due to higher gains on nuclear
decommissioning trust fund investments during the three months
ended March 31, 2000. As noted above, however, gains on nuclear
decommissioning trust fund investments are also recognized as a
corresponding charge to depreciation expense on the condensed
income statements and are earnings neutral.
INTEREST CHARGES AND OTHER: Wisconsin Energy's total interest
expense grew by $9.0 million between the comparative periods of
which $8.2 million was attributable to non-utility operations.
Non-utility distributions on trust preferred securities also
increased by $3.2 million during the first quarter of 2000.
These higher costs are associated primarily with financing
Wisvest-Connecticut, LLC's acquisition of the Bridgeport Harbor
Station and the New Haven Harbor Station in mid-April 1999 and,
to a lesser extent, with additional outside financing required
for increased non-utility real estate activities during the past
year.
INCOME TAXES: Compared to the first quarter of 1999, Wisconsin
Energy's income taxes increased by approximately $3.8 million and
Wisconsin Electric's income taxes increased by $6.5 million due
to increased taxable income at Wisconsin Electric during the
first quarter of 2000.
FACTORS AFFECTING RESULTS OF OPERATIONS
ACQUISITION OF WICOR, INC.
On April 26, 2000, Wisconsin Energy acquired WICOR, Inc. through
a subsidiary merger involving the payment of approximately
$1.2 billion in cash, including related fees and expenses, for
all outstanding shares of WICOR common stock (except for shares
of restricted stock). Approximately $300 million of WICOR debt
remained outstanding following the acquisition. The business
combination, which was funded through the issuance of commercial
paper, will be accounted for as a purchase prospectively from the
date of acquisition. As a result, Wisconsin Energy anticipates
that it will incur significant increases in interest expense and
goodwill amortization expense in its results of operations during
the remainder of 2000.
WICOR is a diversified holding company with two principal
business groups: energy services and pump manufacturing.
Wisconsin Energy is undertaking a thorough review of WICOR's
operations and studying the manner in which the operations of the
two companies can best be optimized and intends to take such
actions as a result of this review as may be deemed appropriate
under the circumstances. Wisconsin Energy currently intends to
continue the primary business operations of WICOR and to continue
to use the physical assets of such primary business operations
for that purpose, while integrating such operations with its own.
As provided by the merger agreement, effective with the merger,
George E. Wardeberg, the Chairman and Chief Executive Officer of
WICOR, was elected as a director and appointed as Vice Chairman
of the Board of Directors of Wisconsin Energy. Willie D. Davis,
an outside director of WICOR, was also elected to the Wisconsin
Energy Board of Directors.
For additional information related to the acquisition of WICOR,
see "Liquidity and Capital Resources" below as well as Item 1.
Financial Statements - "Notes to Financial Statements" in Part I
of this report.
NUCLEAR MATTERS
SPENT FUEL STORAGE AND DISPOSAL: As a result of implementation
of extended fuel cycles, three remaining casks originally
authorized for temporary dry storage of spent fuel by the Public
Service Commission of Wisconsin and remaining space in the spent
fuel pool, Wisconsin Electric currently estimates that it has
sufficient temporary spent fuel storage capacity to continue
operating Point Beach Nuclear Plant until the spring of 2005. On
May 2, 2000, Wisconsin Electric applied to the Public Service
Commission of Wisconsin for authority to obtain and load enough
additional casks to hold all spent fuel from Point Beach during
the remainder of the plant's current licensed life. The current
United States Nuclear Regulatory Commission operating licenses
for Point Beach expire in October 2010 for Unit 1 and in March
2013 for Unit 2.
LEGAL MATTERS
GIDDINGS & LEWIS INC. / CITY OF WEST ALLIS LAWSUIT: See Item 1.
Legal Proceedings - "Environmental Matters" in Part II of this
report for information concerning a July 1999 jury verdict
against Wisconsin Electric awarding the plaintiffs $4.5 million
of actual damages and $100 million in punitive damages in a
lawsuit alleging that Wisconsin Electric had placed contaminated
wastes at two sites in the City of West Allis, Wisconsin.
ELECTRIC SYSTEM RELIABILITY MATTERS
300-MEGAWATT CONTRACT WITH SOUTHERN ENERGY: As previously
reported, Wisconsin Electric signed an eight year agreement in
August 1998 with Atlanta-based Southern Energy, Inc. to purchase
all of the electric output from Southern Energy's 300-megawatt
natural gas-fired peaking power plant in Neenah, Wisconsin. This
new facility began commercial operations on May 8, 2000.
INDUSTRY RESTRUCTURING AND COMPETITION
ELECTRIC UTILITY INDUSTRY RESTRUCTURING IN MICHIGAN: As
previously reported, the Michigan Legislature continues to
consider bills addressing retail access for customers of electric
service providers, and mitigation of market power, among other
subjects. To date, no bill has been passed by either legislative
chamber, and the prospects for passage of any bill during the
remainder of 2000 are uncertain.
RATES AND REGULATORY MATTERS
2000/2001 TEST YEARS: See Item 1. Legal Proceedings - "Rates
and Regulatory Matters" in Part II of this report for information
concerning an application that Wisconsin Electric filed with the
Public Service Commission of Wisconsin in September 1999
requesting incremental price relief for specific capital
investments and for a one-time accounting adjustment as well as a
related interim order received from the Public Service Commission
of Wisconsin in April 2000.
ENVIRONMENTAL MATTERS
NON-UTILITY AIR QUALITY MATTERS: As previously reported, the
Connecticut legislature was considering legislation that would
have imposed air quality restrictions on Wisvest-Connecticut,
LLC's Bridgeport Harbor Station and New Haven Harbor Station in
addition to those air quality restrictions required by current
federal and state law. On May 3, 2000, the Connecticut
legislature adjourned without enacting any legislation on this
subject, and is not expected to reconvene until 2001.
2000 OUTLOOK
EARNINGS: Wisconsin Energy currently projects that its 2000
earnings will be in the range of $1.65 to $1.85 per share. This
earnings projection includes or assumes, among other factors, the
effects of: unusually warm weather during the first quarter of
2000; goodwill amortization and interest charges associated with
the WICOR acquisition; modest synergy savings as a result of the
WICOR merger; the absence of WICOR's results from January through
April 26, 2000; and normal weather and operations of Wisconsin
Energy and all of its subsidiaries, including WICOR and its
subsidiaries, during the remainder of 2000. Subject to the many
variables which can affect such a projection, earnings in 2001
are expected to increase from these levels reflecting a full year
of earnings contributions from WICOR and attainment of a higher
level of merger-related savings.
These earnings projections are forward-looking statements subject
to certain risks, uncertainties and assumptions. Actual results
may vary materially. Factors that could cause actual results to
differ materially include, but are not limited to: general
economic conditions; business and competitive conditions in the
deregulating and consolidating energy industry, in general, and
in the Company's utility service territories; availability of the
Company's generating facilities; changes in purchased power costs
and supply availability; changes in natural gas prices and supply
availability; unusual weather; risks associated with non-utility
diversification; timely realization of anticipated net cost
savings from the WICOR merger; regulatory decisions; disposition
of legal proceedings; and foreign governmental, economic,
political and currency risk. See "Cautionary Factors" below.
LIQUIDITY AND CAPITAL RESOURCES
OPERATING ACTIVITIES: Cash provided by operating activities
totaled $293.0 million at Wisconsin Energy and $295.0 million at
Wisconsin Electric during the first three months of 2000. This
compares to $152.7 million at Wisconsin Energy and $169.1 million
at Wisconsin Electric during the same period in 1999.
INVESTING ACTIVITIES: Net cash used in investing activities
totaled $181.1 million at Wisconsin Energy and $137.7 million at
Wisconsin Electric during the first three months of 2000 compared
to $123.7 million at Wisconsin Energy and $100.7 million at
Wisconsin Electric during the same period in 1999.
Wisconsin Energy's consolidated investing activities during the
first three months of 2000 included $135.0 million for the
acquisition or construction of new or improved facilities of
which $87.0 million was for a number of projects related to
utility plant at Wisconsin Electric, $26.3 million was for non-
utility real estate development activities by Wispark Corporation
and $17.7 million was for non-utility energy projects at Wisvest
Corporation. During 2000, Wisconsin Electric recorded
$36.0 million of payments to and earnings of the Nuclear
Decommissioning Trust Fund for the eventual decommissioning of
Point Beach Nuclear Plant and $10.6 million for the acquisition
of nuclear fuel.
FINANCING ACTIVITIES: During the first three months of 2000,
Wisconsin Energy used $160.6 million of net cash for financing
activities compared to receiving a net of $73.3 million during
the first three months of 1999. Wisconsin Electric used a net of
$200.3 million for financing activities during the first quarter
of 2000 compared to using a net of $75.8 million during the same
period in 1999.
During the first quarter of 2000, Wisconsin Energy issued
1,252,854 new shares of common stock which were purchased by
participants in the Company's stock plans with cash investments
and reinvested dividends aggregating approximately $23.1 million.
Also during the three months ended March 31, 2000, Wispark
Corporation secured $15.5 million of bank financing in the form
of adjustable rate mortgage notes due 2000-2003 to finance the
construction or purchase of various facilities. During the three
months ended March 31, 2000, Wisconsin Energy decreased its short-
term debt in the form of commercial paper by $137.2 million, the
net of a $10.4 million increase by Wisconsin Energy's non-utility
operations and a $147.6 million decrease attributable to
Wisconsin Electric. Also during the first quarter of 2000,
Wisconsin Energy paid $46.5 million of dividends on its common
stock compared to $44.9 million paid by Wisconsin Electric.
CAPITAL REQUIREMENTS AND RESOURCES: Excluding the cash paid for
the WICOR acquisition, capital requirements during the remainder
of 2000 are expected to be principally for construction
expenditures and for other investments, for long-term debt
maturity and sinking fund requirements, and for payments to the
Nuclear Decommissioning Trust Fund for the eventual
decommissioning of Point Beach Nuclear Plant. Including WICOR
and its subsidiaries, Wisconsin Energy's total consolidated
construction and other investment budget for the remainder of
2000 is approximately $580 million, including $325 million at
Wisconsin Electric. These cash requirements are expected to be
met through a combination of the following possible resources:
internal sources of funds from operations, short-term borrowings,
the issuance of intermediate or long-term debt, the issuance of
additional trust preferred securities, and proceeds from the sale
of new-issue common stock under Wisconsin Energy's stock plans.
The amount and timing of any capital market financing has not
been determined and will depend on market conditions and other
factors.
Wisconsin Energy funded the April 26, 2000 acquisition of WICOR,
Inc. through issuance in the institutional private placement
market of $1.2 billion of commercial paper with a weighted
average effective interest rate of 6.09%. Wisconsin Energy has
arranged for two new bank back-up credit facilities to provide
credit support for the issuance of Wisconsin Energy's commercial
paper: a $1.0 billion 364-day bank back-up credit facility and a
$500 million three-year bank back-up credit facility. In
addition, approximately $300 million of WICOR debt remains
outstanding. The following table shows Wisconsin Energy's
consolidated capitalization structure at March 31, 2000, as
reported, and pro formed to give effect to the acquisition of
WICOR as if the merger had occurred as of that date.
<TABLE>
<CAPTION>
March 31, 2000
Capitalization Structure - ------------------------------------------------------
Wisconsin Energy As Reported As Adjusted
- -------------------------- ------------------------- --------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Common Equity $2,034,985 42.0% $2,062,182 32.5%
Preferred Stock 30,450 0.6% 30,450 0.5%
Trust Preferred Securities 200,000 4.1% 200,000 3.1%
Long-Term Debt (Including
current maturities 2,204,844 45.6% 2,426,544 38.2%
Short-Term Debt 370,285 7.7% 1,635,137 25.7%
---------- ------ ---------- ------
$4,840,564 100.0% $6,354,313 100.0%
========== ====== ========== ======
</TABLE>
For additional information related to the acquisition of WICOR,
see "Factors Affecting Results of Operations" above as well as
Item 1. Financial Statements - "Notes to Financial Statements" in
Part I of this report.
Currently, Wisconsin Energy is conducting a strategic assessment
of its portfolio of non-utility assets. The Company may make
further investments and/or acquisitions from time to time in
projects or entities that are expected to provide a satisfactory
return on the investment. Wisconsin Energy may sell all or a
portion of Witech Corporation and a portion of its ownership
interest in certain Wisvest Corporation investments. As a
result, the Company expects that its future long-term capital
requirements as well as its capital resources may continue to
vary from historical levels.
On May 11, 2000, Wisconsin Energy announced that certain assets
of its non-utility real estate development company, Wispark
Corporation, would be sold over the next 12 to 18 months.
Wispark Corporation's assets are currently valued at
approximately $300 million, and Wisconsin Energy expects to sell
approximately 80% of these assets. Proceeds from the sale will
be used to pay down the Company's corporate debt.
In April 2000, in conjunction with consummation of Wisconsin
Energy's acquisition of WICOR, Moody's Investors Service
("Moody's") assigned a general corporate rating of A1 to
Wisconsin Energy and maintained its ratings of the debt
securities of Wisconsin Energy and Wisconsin Electric. Duff &
Phelps Inc. ("D&P") reaffirmed its long-term credit ratings of
Wisconsin Energy and Wisconsin Energy Capital Corporation as well
as its short-term rating of Wisconsin Electric, but downgraded
its long-term credit ratings of Wisconsin Electric. Fitch
Investors Service ("Fitch") assigned initial credit ratings for
Wisconsin Energy, Wisconsin Energy Capital Corporation, WEC
Capital Trust I trust preferred securities and Wisconsin Electric
commercial paper and reaffirmed its long-term ratings of
Wisconsin Electric. Also in April 2000, Standard & Poors
Corporation ("S&P") lowered its ratings on Wisconsin Energy and
Wisconsin Energy's subsidiaries except for the short-term ratings
of Wisconsin Electric, which were reaffirmed. In conjunction
with its debt rating adjustments at the end of April 2000, S&P
removed all long-term ratings on Wisconsin Energy and its
subsidiaries from credit watch with negative implications,
assigning a negative outlook.
In June 1999, S&P and Moody's confirmed the ratings of securities
of Wisconsin Gas Company, WICOR's natural gas distribution
utility subsidiary ("Wisconsin Gas"). These rating actions
followed the June 28, 1999 announcement that Wisconsin Energy
would acquire WICOR. In April 2000, S&P revised the outlook on
Wisconsin Gas from stable to negative and Fitch assigned initial
credit ratings for Wisconsin Gas.
The following table summarizes various current ratings of
Wisconsin Energy's and Wisconsin Electric's securities by S&P,
Moody's, D&P and Fitch as well as securities of Wisconsin Gas by
S&P and Moody's. WICOR's holding company has no debt outstanding
and the commercial paper of WICOR Industries, Inc., a wholly-
owned subsidiary of WICOR, is unrated.
<TABLE>
<CAPTION>
S & P Moody's D & P Fitch
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Wisconsin Energy Corporation
Commercial Paper A-1 P-1 D-1 F1
Wisconsin Electric Power Company
Commercial Paper A-1+ P-1 D-1+ F1+
Senior Secured Debt AA- Aa2 AA AA
Unsecured Debt A+ Aa3 AA- AA-
Preferred Stock A aa3 AA- AA-
Wisconsin Gas Company
Commercial Paper A-1+ P-1 - F1+
Senior Unsecured Debt AA- Aa2 - AA-
Wisconsin Energy Capital Corporation
Unsecured Debt A+ A1 A+ A+
WEC Capital Trust I
Trust Preferred Securities A- a1 A A
</TABLE>
At March 31, 2000, Wisconsin Energy had $398 million of unused
lines of bank credit on a consolidated basis of which
$128 million was attributable to Wisconsin Electric. As noted
above, Wisconsin Energy obtained an additional $1.5 billion of
bank lines in April 2000 in conjunction with its acquisition of
WICOR. At March 31, 2000, WICOR had approximately $130 million
of unused bank lines on a consolidated basis of which $77 million
was attributable to Wisconsin Gas.
*****
For certain other information which may impact Wisconsin Energy's
and Wisconsin Electric's future financial condition or results of
operations, see Item 1. Financial Statements - "Notes to
Financial Statements" in Part I of this report as well as Item 1.
Legal Proceedings in Part II of this report.
CAUTIONARY FACTORS
This report and other documents or oral presentations contain or
may contain forward-looking statements made by or on behalf of
Wisconsin Energy, Wisconsin Electric or Wisconsin Gas. Such
statements are based upon management's current expectations and
are subject to risks and uncertainties that could cause Wisconsin
Energy's, Wisconsin Electric's or Wisconsin Gas' actual results
to differ materially from those contemplated in the statements.
Readers are cautioned not to place undue reliance on the forward-
looking statements. When used in written documents or oral
presentations, the terms "anticipate," "believe," "estimate,"
"expect," "objective," "plan," "possible," "potential," "project"
and similar expressions are intended to identify forward-looking
statements. In addition to the assumptions and other factors
referred to specifically in connection with such statements,
factors that could cause Wisconsin Energy's, Wisconsin Electric's
or Wisconsin Gas' actual results to differ materially from those
contemplated in any forward-looking statements include, among
others, the following.
OPERATING, FINANCIAL AND INDUSTRY FACTORS
* Factors affecting utility operations such as unusual weather
conditions; catastrophic weather-related damage; availability of
Wisconsin Electric's, Edison Sault Electric Company's or Wisvest
Corporation's generating facilities; unscheduled generation
outages, or unplanned maintenance or repairs; unanticipated
changes in fossil fuel, nuclear fuel, purchased power, gas supply
or water supply costs or availability due to higher demand,
shortages, transportation problems or other developments;
nonperformance by electric energy or natural gas suppliers under
existing power purchase or gas supply contracts; nuclear or
environmental incidents; resolution of spent nuclear fuel storage
and disposal issues; electric transmission or gas pipeline system
constraints; unanticipated organizational structure or key
personnel changes; collective bargaining agreements with union
employees or work stoppages; inflation rates; or demographic and
economic factors affecting utility service territories or
operating environment.
* Regulatory factors such as unanticipated changes in rate-
setting policies or procedures; unanticipated changes in
regulatory accounting policies and practices; industry
restructuring initiatives; transmission system operation and/or
administration initiatives; recovery of costs of previous
investments made under traditional regulation; required approvals
for new construction; changes in the United States Nuclear
Regulatory Commission's regulations related to Point Beach
Nuclear Plant; changes in the United States Environmental
Protection Agency's regulations as well as regulations from the
Wisconsin or Michigan Departments of Natural Resources or the
state of Connecticut related to emissions from fossil fuel power
plants; or the siting approval process for new generation and
transmission facilities.
* The rapidly changing and increasingly competitive electric and
gas utility environment as market-based forces replace strict
industry regulation and other competitors enter the electric and
gas markets resulting in increased wholesale and retail
competition.
* Consolidation of the industry as a result of the combination
and acquisition of utilities in the midwest, nationally and
globally.
* Restrictions imposed by various financing arrangements and
regulatory requirements on the ability of Wisconsin Electric,
Wisconsin Gas or other subsidiaries to transfer funds to
Wisconsin Energy in the form of cash dividends, loans or
advances.
* Changes in social attitudes regarding the utility and power
industries.
* Customer business conditions including demand for their
products or services and supply of labor and material used in
creating their products and services.
* The cost and other effects of legal and administrative
proceedings, settlements, investigations and claims, and changes
in those matters including the final outcome of the Giddings &
Lewis, Inc. / City of West Allis lawsuit against Wisconsin
Electric.
* Factors affecting the availability or cost of capital such as
changes in interest rates; the Company's capitalization
structure; market perceptions of the utility industry, the
Company or any of its subsidiaries; or security ratings.
* Federal, state or local legislative factors such as changes in
tax laws or rates; changes in trade, monetary and fiscal
policies, laws and regulations; electric and gas industry
restructuring initiatives; or changes in environmental laws and
regulations.
* Authoritative generally accepted accounting principle or
policy changes from such standard setting bodies as the Financial
Accounting Standards Board and the Securities and Exchange
Commission.
* Unanticipated technological developments that result in
competitive disadvantages and create the potential for impairment
of existing assets.
* Possible risks associated with non-utility diversification
such as competition; operating risks; dependence upon certain
suppliers and customers; the cyclical nature of property values
that could affect real estate investments; unanticipated changes
in environmental or energy regulations; timely regulatory
approval without onerous conditions of potential acquisitions;
risks associated with minority investments, where there is a
limited ability to control the development, management or
operation of the project; and the risk of higher interest costs
associated with potentially reduced securities ratings by
independent rating agencies as a result of these and other
factors.
* Legislative or regulatory restrictions or caps on non-utility
acquisitions, investments or projects, including the state of
Wisconsin's amended public utility holding company law.
* Factors affecting foreign non-utility operations and
investments including foreign governmental actions; foreign
economic and currency risks; political instability; and
unanticipated changes in foreign environmental or energy
regulations.
* Other business or investment considerations that may be
disclosed from time to time in Wisconsin Energy's, Wisconsin
Electric's or Wisconsin Gas' Securities and Exchange Commission
filings or in other publicly disseminated written documents.
BUSINESS COMBINATION FACTORS
* Consummation of the merger with WICOR, which will have a
significant effect on the future operations and financial
position of Wisconsin Energy. Specific factors include:
* Unanticipated costs or difficulties related to the integration
of the businesses of Wisconsin Energy and WICOR.
* Unanticipated financing or other consequences resulting from
the additional short-term debt issued to fund the acquisition of
WICOR.
* Unexpected difficulties or delays in realizing anticipated net
cost savings or unanticipated effects of the qualified five-year
electric and gas rate freeze ordered by the Public Service
Commission of Wisconsin as a condition of approval of the merger.
Wisconsin Energy, Wisconsin Electric and Wisconsin Gas undertake
no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
For information concerning Wisconsin Energy's and Wisconsin
Electric's market risk exposures, see Item 7. Management's
Discussion and Analysis of Financial Condition and Results of
Operations - "Factors Affecting Results of Operations - Market
Risks" in Part II of Wisconsin Energy's and Wisconsin Electric's
combined Annual Report on Form 10-K for the year ended
December 31, 1999.
PART II - OTHER INFORMATION
---------------------------
ITEM 1. LEGAL PROCEEDINGS
The following should be read in conjunction with Item 3. Legal
Proceedings in Part I of Wisconsin Energy's and Wisconsin
Electric's combined Annual Report on Form 10-K for the year ended
December 31, 1999.
ENVIRONMENTAL MATTERS
GIDDINGS & LEWIS, INC. / CITY OF WEST ALLIS LAWSUIT: In July
1996, Giddings & Lewis, Inc., Kearney & Trecker Corporation, now
a part of Giddings & Lewis, Inc., and the City of West Allis
brought an action in the Milwaukee County Circuit Court alleging
that in 1959 Wisconsin Electric had deposited cyanide
contaminated wood chips at two sites in West Allis, Wisconsin,
owned by the plaintiffs. Environmental remediation at both sites
was completed several years ago, with the current owners paying
for disposal of materials found on their respective portions of
the sites. Internal investigations led Wisconsin Electric to
believe that it was not the source of this waste.
In July 1999, a jury issued a verdict against Wisconsin Electric
awarding the plaintiffs $4.5 million in compensatory damages for
clean-up costs and loss of property value and $100 million in
punitive damages. In October 1999, the Circuit Court denied
Wisconsin Electric's post trial motions and directed that
judgment on the verdict be entered. Wisconsin Electric has filed
a notice of appeal of the judgment to the Wisconsin Court of
Appeals.
In December 1999, in order to stop the post-judgment accrual of
interest at 12% per annum during the pendency of the appeal,
Wisconsin Electric tendered a contested liability payment of
$110 million, which is part of "Deferred Charges and Other
Assets - Other" on the condensed balance sheets, to the Clerk of
Circuit Court for Milwaukee County representing the amount of the
verdict and accrued interest. Under Wisconsin law, the
plaintiffs are liable to Wisconsin Electric upon reversal or
reduction of the judgment for the applicable amount of the funds
tendered with interest.
In further post-trial proceedings, the plaintiffs filed with the
Circuit Court a motion for sanctions based upon representations
made by Wisconsin Electric during trial that it had no insurance
coverage for the punitive damage award. The Circuit Court held
hearings on the sanctions issue in February 2000. On April 27,
2000, the Circuit Court Judge issued a ruling on the sanctions
matter, imposing the following sanctions against Wisconsin
Electric: (i) "judgment in the alternative" as a sanction,
thereby finding an alternative basis upon which to sustain the
$104.5 million verdict returned by the jury; (ii) a bar against
Wisconsin Electric pursuing insurance coverage for the punitive
damage portion of the verdict; and (iii) a requirement that
Wisconsin Electric pay the plaintiffs' costs relating to the
sanctions matter. In addition to its appeal of the judgment
entered on the jury's verdict, Wisconsin Electric will also
appeal the Judge's ruling on the sanctions matter.
In the opinion of management, based in part on the advice of
legal counsel, the jury verdict was not supported by the evidence
or the law and the unprecedented award of punitive damages of
this magnitude was unwarranted and should therefore be reversed
or substantially reduced on appeal. Management also believes
that the sanctions imposed by the Judge were not supported by the
evidence or the law. As such, Wisconsin Electric has not
established a reserve for potential damages from this suit.
RATES AND REGULATORY MATTERS
2000/2001 TEST YEARS: In September 1999, Wisconsin Electric
submitted an application with the Public Service Commission of
Wisconsin requesting incremental price relief for specific
capital investments for electric and gas system reliability and
safety and for a one-time accounting adjustment. The application
further recommended the adoption of performance-based measures
and incentives. In its application, Wisconsin Electric proposed
a two-step price increase. The first requested increase, to be
effective January 1, 2000, totaled $46 million (3.1%) for
electric operations and $8 million (2.3%) for gas operations.
The second requested price increase, to be effective January 1,
2001, totaled $29 million (2.0%) for electric operations.
On December 23, 1999, Wisconsin Electric requested that interim
price relief be granted by the Public Service Commission of
Wisconsin, subject to refund, as soon as possible because it
anticipated that a final order on its price request would not be
issued until the summer of 2000. Wisconsin Electric withdrew its
request to implement performance-based prices because some
elements of the proposed performance-based price plan were not
compatible with the Public Service Commission of Wisconsin's
approval of the Company's merger with WICOR. On March 23, 2000,
the Public Service Commission of Wisconsin approved Wisconsin
Electric's request for interim price increases, authorizing a
$25.2 million (1.7%) increase for electric operations and an
$11.6 million (3.1%) increase for gas operations. The interim
increase, which is subject to potential refund, became effective
April 11, 2000. Rates in the interim order are based on a 12.2%
return on common equity and will be in effect until superceded by
a final order establishing new rates.
The Public Service Commission of Wisconsin finished hearing
testimony on Wisconsin Electric's original September 1999
application on April 26, 2000. Subject to unexpected delays or
other matters that might arise in the interim, Wisconsin Electric
expects a final order on its September 1999 incremental price
relief application to be issued by the Public Service Commission
of Wisconsin in the summer of 2000.
As a condition of its approval of Wisconsin Energy's merger with
WICOR, the Public Service Commission of Wisconsin ordered a
qualified five-year rate freeze that becomes effective on
January 1, 2001 concurrent with any second step rate changes
included in the final order on the 2000/2001 test years.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
The following Exhibits are filed with or incorporated by
reference in the applicable Form 10-Q report:
Exhibit No.
- -----------
WISCONSIN ENERGY CORPORATION
2.1 Agreement and Plan of Merger, dated as of June 27, 1999,
as amended as of September 9, 1999, by and among Wisconsin Energy
Corporation, WICOR, Inc. and CEW Acquisition, Inc.(incorporated
herein by reference to Appendix A to the joint proxy
statement/prospectus dated September 10, 1999, included in
Wisconsin Energy's Registration on Form S-4 filed on September 9,
1999 (File No. 333-86827) (the "Form S-4")).
2.2 Amendment to Agreement and Plan of Merger dated as of
September 9, 1999 (incorporated herein by reference to Exhibit
2.2 to the Form S-4).
2.3 Second Amendment to Agreement and Plan of Merger dated as
of April 26, 2000 (incorporated herein by reference to Exhibit
2.3 to Wisconsin Energy's Current Report on Form 8-K dated as of
April 26, 2000).
3.1 Bylaws of Wisconsin Energy, as amended to May 1, 2000.
10.1(a) Updated form of Incentive Stock Option Agreement under
1993 Omnibus Stock Incentive Plan, as amended.
10.1(b) Updated form of Non-Qualified Stock Option Agreement
under 1993 Omnibus Stock Incentive Plan, as amended.
10.2(a) Employment Agreement with George E. Wardeberg as Vice
Chairman of the Board of Directors of Wisconsin Energy
Corporation, effective April 26, 2000.
10.2(b) Non-Qualified Stock Option Agreement with George E.
Wardeberg, dated April 26, 2000, granted pursuant to
the Employment Agreement.
10.3 Amended and Restated Wisconsin Energy Corporation
Special Executive Severance Policy, effective as of
April 26, 2000.
10.4 Amended and Restated Wisconsin Energy Corporation
Executive Severance Policy, effective as of April 26,
2000.
27.1 Wisconsin Energy Corporation Financial Data Schedule
for the three months ended March 31, 2000.
27.2 Wisconsin Energy Corporation Restated Financial Data
Schedule for the three months ended March 31, 1999,
which reflects the reclassification of certain amounts
to conform to Wisconsin Energy's current financial
statement presentation.
WISCONSIN ELECTRIC POWER COMPANY
3.2 Bylaws of Wisconsin Electric Power Company as amended
to May 1, 2000.
27.3 Wisconsin Electric Power Company Financial Data
Schedule for the three months ended March 31, 2000.
27.4 Wisconsin Electric Power Company Restated Financial
Data Schedule for the three months ended March 31,
1999, which reflects the reclassification of certain
amounts to conform to Wisconsin Electric's current
financial statement presentation.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by Wisconsin Energy or by
Wisconsin Electric during the quarter ended March 31, 2000.
A Current Report on Form 8-K dated as of April, 26, 2000 was
filed by Wisconsin Energy disclosing the consummation of
Wisconsin Energy's acquisition of WICOR, Inc., an update on
securities ratings, and the Circuit Court Judge's ruling on
the sanctions matter relating to the Giddings & Lewis / City
of West Allis lawsuit, and incorporating and filing as an
exhibit WICOR's historical financial statements.
A Current Report on Form 8-K dated as of April 27, 2000 was
filed by Wisconsin Electric disclosing an update on
securities ratings and the Circuit Court Judge's ruling on
the sanctions matter relating to the Giddings & Lewis / City
of West Allis lawsuit.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, each registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
WISCONSIN ENERGY CORPORATION
----------------------------
(Registrant)
/s/ Paul Donovan
Date: May 12, 2000 -----------------------------------
Paul Donovan, Senior Vice President,
Chief Financial Officer and duly
authorized officer
WISCONSIN ELECTRIC POWER COMPANY
--------------------------------
(Registrant)
/s/ Calvin H. Baker
Date: May 12, 2000 -----------------------------------------
Calvin H. Baker, Vice President -
Finance, Chief Financial Officer and duly
authorized officer
WISCONSIN ELECTRIC POWER COMPANY
FORM 10-Q REPORT FOR THE QUARTER ENDED MARCH 31, 2000
EXHIBIT INDEX
The following exhibits are in this report:
Exhibit No.
-------------
3.2 Bylaws of Wisconsin Electric Power Company as amended
to May 1, 2000.
27.3 Wisconsin Electric Power Company Financial Data
Schedule for the three months ended March 31, 2000.
27.4 Wisconsin Electric Power Company Restated Financial
Data Schedule for the three months ended March 31,
1999, which reflects the reclassification of certain
amounts to conform to Wisconsin Electric's current
financial statement presentation.
BYLAWS Exhibit (3)-2
of
WISCONSIN ELECTRIC POWER COMPANY
As Amended to May 1, 2000, Inclusive
TABLE OF CONTENTS
ARTICLE I. STOCKHOLDERS
1.01 Annual Meeting
1.02 Special Meetings
1.03 Place of Meetings; Postponements and Adjournments
1.04 Notices to Stockholders
(a) Required Notice
(b) Fundamental Transactions
1.05 Fixing of Record Date
1.06 Quorum and Voting Requirements
1.07 Conduct of Meetings
1.08 Voting at Meetings
(a) Proxies; Voting and Inspectors of Election
(b) Proxies Upon Accrual of Special Right
1.09 Stockholder Unanimous Consent Without a Meeting
1.10 Stockholder Waiver of Notice
1.11 Notice of Stockholder Nomination(s) and/or Proposal(s)
ARTICLE II. BOARD OF DIRECTORS
2.01 Number
2.02 Term of Office
2.03 Election and Tenure
2.04 Removal
2.05 Vacancies
2.06 Regular Meetings
2.07 Special Meetings
2.08 Meetings by Telephone or Other Communication Technology
2.09 Notice of Meetings
2.10 Quorum
2.11 Manner of Acting
2.12 Committees
2.13 Compensation
2.14 Presumption of Assent
2.15 Director Unanimous Consent Without a Meeting
ARTICLE III. OFFICERS
3.01 Appointment
3.02 Resignation and Removal
3.03 Vacancies
3.04 Powers and Duties
3.05 Execution of Instruments
ARTICLE IV. CERTIFICATES FOR SHARES AND THEIR TRANSFER
4.01 Stock Certificates and Facsimile Signatures
4.02 Transfer of Stock
4.03 Lost, Destroyed or Stolen Certificates
4.04 Shares Without Certificates
ARTICLE V. INDEMNIFICATION
5.01 Mandatory Indemnification
5.02 Certain Definitions
5.03 Legal Enforceability
5.04 Limitation on Modification or Termination
5.05 Non-Exclusive Bylaw
ARTICLE VI. OTHER INDEMNIFICATION PROVISIONS
6.01 Indemnification for Successful Defense
6.02 Other Indemnification
6.03 Written Request
6.04 Nonduplication
6.05 Determination of Right to Indemnification
6.06 Advance of Expenses
6.07 Limitations on Indemnification
6.08 Court-Ordered Indemnification
6.09 Indemnification and Allowance of Expenses of Employees and
Agents
6.10 Insurance
6.11 Securities Law Claims
6.12 Liberal Construction
ARTICLE VII. CONTRACTS, CHECKS, NOTES, BONDS, ETC.
7.01 Contracts
7.02 Checks, Drafts, Etc.
ARTICLE VIII. FISCAL YEAR
ARTICLE IX. CORPORATE SEAL
ARTICLE X. EFFECT OF HEADINGS
ARTICLE XI. AMENDMENTS
11.01 By Stockholders
11.02 By Directors
11.03 Implied Amendments
11.04 Certain Voting Requirements Preserved
ARTICLE I.
STOCKHOLDERS
1.01. Annual Meeting. The annual meeting of the
stockholders of the corporation shall be held each year on the
first business day of June, or on such earlier or later date and
at the time designated by or under the authority of the Board of
Directors, the Chairman of the Board, the President or the
Corporate Secretary, for the purpose of electing directors and
for the transaction of such other business as may properly come
before the meeting.
1.02. Special Meetings. Special meetings of the
stockholders, for any purpose or purposes, unless otherwise
prescribed by the Wisconsin Business Corporation Law, may be
called by the Chairman of the Board, the President or a majority
of the Board of Directors, or in case the meeting is for the
purpose of enabling the holders of the Six Per Cent Preferred
Stock, the $100 Par Value Serial Preferred Stock and the $25 Par
Value Serial Preferred Stock (hereinafter together called the
"Preferred Stocks") to elect directors of the corporation, upon
the conditions set forth in the Articles of Incorporation, then,
upon call as therein provided. If and as required by the
Wisconsin Business Corporation Law, a special meeting shall be
called upon written demand describing one or more purposes for
which it is to be held by holders of shares with at least 10% of
the votes entitled to be cast on any issue proposed to be
considered at the meeting. The time and purpose or purposes of
any special meeting shall be described in the notice required by
Section 1.04 of these Bylaws and only business within the
purpose(s) described in such notice shall be conducted at such
meeting.
1.03. Place of Meetings; Postponements and Adjournments.
The Board of Directors, the Chairman of the Board, the President
or the Corporate Secretary may designate any place, either within
or without the State of Wisconsin, as the place of meeting for
any annual meeting or any special meeting, including any
adjourned meeting. The Board of Directors, the Chairman of the
Board, the President or the Corporate Secretary may postpone any
previously scheduled annual meeting or special meeting by giving
public notice of the postponed meeting date at any time prior to
the scheduled meeting date. If no designation is made, the place
of meeting shall be the principal office of the corporation. Any
meeting may be adjourned from time to time, whether or not a
quorum is present, by the chairperson of the meeting or by vote
of a majority of the votes entitled to be cast by the shares
represented thereat.
1.04. Notices to Stockholders.
(a) Required Notice. Notice may be communicated by mail,
private carrier, or any other means permissible under Wisconsin
law. Written notice stating the scheduled place, day and hour of
the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be communicated
or sent not less than ten (10) days, unless a longer period is
required by the Wisconsin Business Corporation Law or the
Articles of Incorporation, nor more than ninety (90) days, unless
a longer period is permitted or a shorter period is required by
the Wisconsin Business Corporation Law, before the date of the
meeting, by or at the direction of the Chairman of the Board, the
President or the Corporate Secretary, to each stockholder of
record entitled to vote at such meeting or, for the fundamental
transactions described in subsections (b)(1) to (4) below, for
which the Wisconsin Business Corporation Law requires that notice
be given to stockholders not entitled to vote, to all
stockholders of record. For purposes of this Section 1.04,
notice by "electronic transmission" (as defined in the Wisconsin
Business Corporation Law) is written notice. Written notice is
effective (1) when mailed, if mailed postpaid and addressed to
the stockholder's address shown in the corporation's current
record of stockholders; (2) when electronically transmitted to
the stockholder in a manner authorized by the stockholder. At
least twenty (20) days' notice shall be provided if the purpose,
or one of the purposes, of the meeting is to consider a plan of
merger or share exchange for which stockholder approval is
required by law, or the sale, lease, exchange or other
disposition of all or substantially all of the corporation's
property, with or without good will, otherwise than in the usual
and regular course of business. A stockholder may waive notice
in accordance with Section 1.10 of these Bylaws.
(b) Fundamental Transactions. If a purpose of any
stockholder meeting is to consider either: (1) a proposed
amendment to the Articles of Incorporation (including any
restated articles); (2) a plan of merger or share exchange for
which stockholder approval is required by law; (3) the sale,
lease, exchange or other disposition of all or substantially all
of the corporation's property, with or without good will,
otherwise than in the usual and regular course of business; (4)
the dissolution of the corporation; or (5) the removal of a
director, the notice must so state and in cases (1), (2) and (3)
above must be accompanied by, respectively, a copy or summary of
the: (1) proposed articles of amendment or a copy of the restated
articles that identifies any amendment or other change;
(2) proposed plan of merger or share exchange; or (3) proposed
transaction for disposition of all or substantially all of the
corporation's property. If the proposed corporate action creates
dissenters' rights, the notice must state that stockholders and
beneficial stockholders are or may be entitled to assert
dissenters' rights, and must be accompanied by a copy of Sections
180.1301 to 180.1331 (or successor provisions) of the Wisconsin
Business Corporation Law.
1.05. Fixing of Record Date. The Board of Directors, the
Chairman of the Board, the President or the Corporate Secretary
or any other officer authorized by the Board of Directors, may
fix in advance a date as the record date for one or more voting
groups for any determination of stockholders entitled to notice
of a stockholders' meeting, to demand a special meeting, to vote,
or to take any other action, such date in any case to be not more
than seventy (70) days and, in case of a meeting of stockholders,
dividend or stock split, not less than ten (10) days prior to the
meeting or action requiring such determination of stockholders,
and may fix the record date for determining stockholders entitled
to a share dividend or distribution. If within thirty (30) days
after the corporation receives one or more written demands for a
special stockholder meeting that purport to satisfy the
requirements of Section 180.0702(1)(b) of the Wisconsin Business
Corporation Law (or any successor provision) no record date has
been fixed pursuant to the first sentence of this Section 1.05
for the determination of stockholders entitled to demand such a
stockholder meeting, the record date for determining stockholders
entitled to demand such meeting shall be the date that the first
stockholder signed the demand. If no record date has been fixed
pursuant to the first sentence of this Section 1.05 for the
determination of stockholders entitled (A) to notice of or to
vote at a meeting of stockholders prior to the time that notice
of the meeting is mailed or otherwise delivered to stockholders,
or (B) to consent to action without a meeting within thirty (30)
days after the corporation receives the first written consent to
stockholder action without a meeting, (a) the close of business
on the day before the first notice of the meeting is mailed or
otherwise delivered to stockholders or (b) the date that the
first stockholder signed the first written consent to stockholder
action without a meeting, respectively, shall be the record date
for the determination of such stockholders. When a determination
of stockholders entitled to vote at any meeting of stockholders
has been made as provided in this section, such determination
shall be applied to any postponement or adjournment thereof
unless the Board of Directors fixes a new record date and except
as otherwise required by law. A new record date must be set if a
meeting is postponed or adjourned to a date more than 120 days
after the date fixed for the original meeting.
1.06. Quorum and Voting Requirements. Except as otherwise
provided in the Articles of Incorporation or in the Wisconsin
Business Corporation Law, a majority of the votes entitled to be
cast by shares entitled to vote as a separate voting group on a
matter, represented in person or by proxy, shall constitute a
quorum of that voting group for action on that matter at a
meeting of stockholders. If a quorum exists, action on a matter,
other than the election of directors, by a voting group is
approved if the votes cast within the voting group favoring the
action exceed the votes cast opposing the action unless a greater
number of affirmative votes is required by the Wisconsin Business
Corporation Law, the Articles of Incorporation, or any other
provision of these Bylaws. If the Articles of Incorporation or
the Wisconsin Business Corporation Law provide for voting by two
(2) or more classes or voting groups on a matter, action on that
matter is taken only when voted upon by each of those voting
groups counted separately.
1.07. Conduct of Meetings. The Chairman of the Board, or
in his absence or at his request, the Vice Chairman of the Board,
and in his absence, the President, and in the President's
absence, a Vice President, and in their absence, any person
chosen by the stockholders present shall call the meeting of the
stockholders to order and shall act as chairperson of the
meeting, and the Corporate Secretary shall act as secretary of
all meetings of the stockholders, but, in the absence of the
Corporate Secretary, the chairperson of the meeting may appoint
any other person to act as secretary of the meeting.
1.08. Voting at Meetings.
(a) Proxies; Voting and Inspectors of Election. At all
meetings of stockholders, a stockholder entitled to vote may vote
in person or by proxy appointed as provided in the Wisconsin
Business Corporation Law. The means by which a stockholder or
the stockholder's authorized officer, director, employee, agent
or attorney-in-fact may authorize another person to act for the
stockholder by appointing the person as proxy include:
(1) Appointment of a proxy in writing by signing or
causing the stockholder's signature to be affixed to an
appointment form by any reasonable means, including, but not
limited to, by facsimile signature.
(2) Appointment of a proxy by transmitting or
authorizing the transmission of an electronic transmission of the
appointment to the person who will be appointed as proxy or to a
proxy solicitation firm, proxy support service organization or
like agent authorized to receive the transmission by the person
who will be appointed as proxy. Every electronic transmission
shall contain, or be accompanied by, information that can be used
to reasonably determine that the stockholder transmitted or
authorized the transmission of the electronic transmission. Any
person charged with determining whether a stockholder transmitted
or authorized the transmission of the electronic transmission
shall specify the information upon which the determination is
made.
An appointment of a proxy is effective when a signed
appointment form or an electronic transmission of the appointment
is received by the inspector of election or the officer or agent
of the corporation authorized to tabulate votes. An appointment
is valid for 11 months unless a different period is expressly
provided in the appointment. An appointment of a proxy is
revocable unless the appointment form or electronic transmission
states that it is irrevocable and the appointment is coupled with
an interest. The presence of a stockholder who has made an
effective proxy appointment shall not of itself constitute a
revocation.
Voting at meetings of stockholders need not be by written
ballot unless so determined by the Board of Directors, the
Chairman of the Board, the President or the Corporate Secretary.
Voting at meetings of stockholders shall be conducted by one or
more inspectors of election appointed by the Board of Directors,
the Chairman of the Board, the President or the Corporate
Secretary. However, no director or person who is a candidate for
the office of director shall be appointed as such inspector. The
inspectors, or persons representing the inspector if the
inspector is an institution, before entering upon the discharge
of their duties, shall take and subscribe an oath faithfully to
execute the duties of inspector at such meeting with strict
impartiality and according to the best of their ability.
(b) Proxies Upon Accrual of Special Right. In connection
with the first election of a majority of the members of the Board
of Directors by the holders of the Preferred Stocks upon accrual
of the special right of such holders to elect a majority of the
members of the Board, as provided in Article III of the Articles
of Incorporation, the corporation shall prepare and mail to such
holders of record such proxy forms, communications and documents
as may be deemed appropriate (and also such as may be required by
any governmental authority having jurisdiction) for the purpose
of soliciting proxies for the election of directors by such
holders, voting separately as a class without regard to series.
1.09. Stockholder Unanimous Consent Without a Meeting.
Any action required by the Articles of Incorporation, Bylaws or
any provision of law to be taken at a meeting of stockholders or
any other action which may be taken at such a meeting may be
taken without a meeting if consent in writing setting forth the
action so taken shall be signed by all of the stockholders
entitled to vote with respect to the subject matter thereof and
such consent shall have the same force and effect as a unanimous
vote.
1.10. Stockholder Waiver of Notice. A stockholder may
waive any notice required by the Wisconsin Business Corporation
Law, the Articles of Incorporation or these Bylaws before or
after the date and time stated in the notice. The waiver shall
be in writing and signed by the stockholder entitled to the
notice, shall contain the same information that would have been
required in the notice under the Wisconsin Business Corporation
Law except that the time and place of meeting need not be stated,
and shall be delivered to the corporation for inclusion in the
corporate records. A stockholder's attendance at a meeting, in
person or by proxy, waives objection to both of the following:
(a) Lack of notice or defective notice of the meeting,
unless the stockholder at the beginning of the meeting or
promptly upon arrival objects to holding the meeting or
transacting business at the meeting.
(b) Consideration of a particular matter at the
meeting that is not within the purpose described in the
meeting notice, unless the stockholder objects to
considering the matter when it is presented.
1.11. Notice of Stockholder Nomination(s) and/or
Proposal(s). Except with respect to nomination(s) or proposal(s)
adopted or recommended by the Board of Directors for inclusion in
the corporation's proxy statement for its annual meeting, a
stockholder entitled to vote at a meeting may nominate a person
or persons for election as director(s) or propose action(s) to be
taken at a meeting only if written notice of any stockholder
nomination(s) and/or proposal(s) to be considered for a vote at
an annual meeting of stockholders is delivered personally or
mailed by Certified Mail-Return Receipt Requested at least
seventy (70) days and not more than one hundred (100) days before
the scheduled date of such meeting to the Corporate Secretary of
the corporation at the principal business office of the
corporation. With respect to stockholder nomination(s) for the
election of directors each such notice shall set forth: (a) the
name and address of the stockholder who intends to make the
nomination(s), of any beneficial owner of shares on whose behalf
such nomination is being made and of the person or persons to be
nominated; (b) a representation that the stockholder is a holder
of record of stock of the corporation entitled to vote at such
meeting (including the number of shares the stockholder owns as
of the record date (or as of the most recent practicable date if
no record date has been set) and the length of time the shares
have been held) and intends to appear in person or by proxy at
the meeting to nominate the person or persons specified in the
notice; (c) a description of all arrangements and understandings
between the stockholder or any beneficial holder on whose behalf
it holds such shares, and their respective affiliates, and each
nominee and any other person or persons (naming such person or
persons) pursuant to which the nomination or nominations are to
be made by the stockholder; (d) such other information regarding
each nominee proposed by such stockholder as would have been
required to be included in a proxy statement filed pursuant to
the proxy rules of the Securities and Exchange Commission
(whether or not such rules are applicable) had each nominee been
nominated, or intended to be nominated, by the Board of
Directors; and (e) the consent of each nominee to serve as a
director of the corporation if so elected. With respect to
stockholder proposal(s) for action(s) to be taken at an annual
meeting of stockholders, the notice shall clearly set forth: (a)
the name and address of the stockholder who intends to make the
proposal(s); (b) a representation that the stockholder is a
holder of record of the stock of the corporation entitled to vote
at the meeting (including the number of shares the stockholder
owns as of the record date (or as of the most recent practicable
date if no record date has been set) and the length of time the
shares have been held) and intends to appear in person or by
proxy to make the proposal(s) specified in the notice; (c) the
proposal(s) and a brief supporting statement of such proposal(s);
and (d) such other information regarding the proposal(s) as would
have been required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange
Commission (whether or not such rules are applicable).
Except with respect to nomination(s) or proposal(s) adopted
or recommended by the Board of Directors for inclusion in the
notice to stockholders for a special meeting of stockholders, a
stockholder entitled to vote at a special meeting may nominate a
person or persons for election as director(s) and/or propose
action(s) to be taken at a meeting only if written notice of any
stockholder nomination(s) and/or proposal(s) to be considered for
a vote at a special meeting is delivered personally or mailed by
Certified Mail-Return Receipt Requested to the Corporate
Secretary of the corporation at the principal business office of
the corporation so that it is received in a reasonable period of
time before such special meeting and only if such nomination or
proposal is within the purposes described in the notice to
stockholders of the special meeting. All other notice
requirements regarding stockholder nomination(s) and/or
proposal(s) applicable to annual meetings also apply to
nomination(s) and/or proposal(s) for special meetings.
The chairperson of the meeting may refuse to acknowledge the
nomination(s) and/or proposal(s) of any person made without
compliance with the foregoing procedures. This section shall not
affect the corporation's rights or responsibilities with respect
to its proxies or proxy statement for any meeting.
ARTICLE II.
BOARD OF DIRECTORS
2.01. Number. The number of directors constituting the
whole Board of Directors shall be such number as shall be fixed
from time to time by the affirmative vote of the whole Board but
in no event shall the number be less than three. The number of
directors at any time constituting the whole Board shall not be
reduced so as to shorten the term of any director then in office.
Directors need not be stockholders of the corporation.
2.02. Term of Office. The directors shall hold office
until the next annual meeting of stockholders at which their
respective terms of office shall expire and until their
respective successors are duly elected and qualified, unless
their term of office shall be sooner terminated as provided in
the Articles of Incorporation in connection with the accrual of
the special right of the holders of the Preferred Stocks to elect
a majority of the members of the Board of Directors in the event
of certain dividend defaults.
2.03. Election and Tenure. Unless action is taken without
a meeting under these Bylaws, directors shall be elected by a
plurality of the votes cast by the shares entitled to vote in the
election at a stockholders meeting at which a quorum is present.
Each director shall hold office until the end of such director's
term and until such director's successor has been elected, or
until such director's prior death, resignation or removal. A
director may resign at any time by filing a written resignation
with the Corporate Secretary of the corporation.
2.04. Removal. Subject to the remainder of this
Section 2.04, the shareholders may remove one or more directors
from office as provided in the Wisconsin Business Corporation
Law. During any continuance of the special right of the holders
of the Preferred Stocks to elect a majority of the members of the
Board, as provided in Article III of the Articles of
Incorporation, at any meeting of the stockholders, the holders of
a majority of the votes entitled to be cast by shares of the
Preferred Stocks of the corporation, voting separately as a class
without regard to series, may remove any director theretofore
elected by the holders of the Preferred Stocks or elected by the
Board to fill a vacancy among the directors elected by the
holders of the Preferred Stocks, and may fill any vacancy in the
Board for the unexpired term thus caused; and the holders of a
majority of the votes entitled to be cast by the shares of Common
Stock of the corporation, voting separately as a class, may
remove any director theretofore elected by the Common
stockholders or elected by the Board to fill a vacancy among the
directors elected by the Common stockholders, and may fill the
vacancy in the Board for the unexpired term thus caused.
2.05. Vacancies. Any vacancy occurring in the Board of
Directors, including a vacancy created by an increase in the
number of directors, may be filled by the stockholders or the
Board of Directors. If the directors remaining in office
constitute fewer than a quorum of the Board, the directors may
fill a vacancy by the affirmative vote of a majority of all
directors remaining in office. Each director so elected shall
hold office for a term expiring at the next annual stockholders'
meeting. However, if the vacant office was held by a director
elected by the holders of the Preferred Stocks or by the holders
of the Common Stock, only the holders of shares of that voting
group may vote to fill the vacancy if it is filled by the
shareholders, and only the remaining directors elected by that
voting group may vote to fill the vacancy if it is filled by the
directors.
2.06. Regular Meetings. Regular meetings of the Board of
Directors and any committee thereof shall be held at such time
and place, either within or without the State of Wisconsin, as
may from time to time be fixed by the Board or such committee
without other notice than the schedule prepared by the Corporate
Secretary or the resolution or other action of the Board or
committee establishing the time and place of such regular
meetings.
2.07. Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the Board of
Directors, the Executive Committee, the Chairman of the Board,
the President, any committee designated by the Board with
specific authority to do such or any two (2) directors. Special
meetings of any committee may be called by or at the request of
the foregoing persons or the chairman of the committee. The
persons calling any special meeting of the Board of Directors or
committee may fix any place, either within or without the State
of Wisconsin, as the place for holding any special meeting called
by them, and if no other place is fixed the place of meeting
shall be the principal business office of the corporation.
2.08. Meetings by Telephone or Other Communication
Technology. (a) Any or all directors may participate in a
regular or special meeting of the Board of Directors or in a
committee meeting by, or conduct the meeting through the use of,
telephone or any other means of communication by which either:
(i) all participating directors may simultaneously hear each
other during the meeting or (ii) all communication during the
meeting is immediately transmitted to each participating
director, and each participating director is able to immediately
send messages to all other participating directors.
(b) If a meeting will be conducted through the use of any
means described in paragraph (a), all participating directors
shall be informed that a meeting is taking place at which
official business may be transacted. A director participating in
a meeting by any means described in paragraph (a) is deemed to be
present in person at the meeting.
2.09. Notice of Meetings. Notice of each meeting of the
Board of Directors (unless otherwise provided in or pursuant to
Section 2.06 of these Bylaws) shall be given by written notice
delivered personally or mailed or given by telephone or telegram
to each director at his business address or at such other address
as such director shall have designated in writing filed with the
Corporate Secretary, in each case not less than 6 hours prior
thereto. If mailed, such notice shall be deemed to be delivered
when deposited in the United States mail so addressed, with
postage thereon prepaid. If notice be given by telegram, such
notice shall be deemed to be delivered when the telegram is
delivered to the telegraph company; if by telephone, at the time
the call is completed. Whenever any notice whatever is required
to be given to any director of the corporation under the Articles
of Incorporation, Bylaws or any provision of law, a waiver
thereof in writing, signed at any time, whether before or after
the time of meeting, by the director entitled to such notice,
shall be deemed equivalent to the giving of such notice. The
attendance of a director at a meeting shall constitute a waiver
of notice of such meeting, except where a director attends a
meeting and objects thereat to the transaction of any business
because the meeting is not lawfully called or convened. Neither
the business to be transacted at, nor the purpose of, any regular
or special meeting of the Board need be specified in the notice
or waiver of notice of such meeting.
2.10. Quorum. Except as otherwise provided by the
Wisconsin Business Corporation Law or these Bylaws, a majority of
the number of directors as provided in or pursuant to Section
2.01 shall constitute a quorum of the Board of Directors, and a
majority of the number of directors appointed to serve on a
committee shall constitute a quorum of the committee. If at any
meeting of the Board of Directors or any committee thereof there
shall be less than a quorum present, a majority of the directors
present may adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall have
been obtained, when any business may be transacted which might
have been transacted at the meeting as first convened had there
been a quorum.
2.11. Manner of Acting. The affirmative vote of a
majority of the directors present at a meeting at which a quorum
is present shall be the act of the Board of Directors or any
committee thereof unless the affirmative vote of a greater number
is otherwise required by the Wisconsin Business Corporation Law,
the Articles of Incorporation, the Bylaws or any provision of
law.
2.12. Committees. The Board of Directors, by resolution
adopted by the affirmative vote of a majority of all the
directors then in office, may create one or more committees, each
committee to consist of two (2) or more directors appointed by
the Board of Directors to serve as members of the committee,
which to the extent provided in the resolution as initially
adopted, and as thereafter supplemented or amended by further
resolution adopted by a like vote, may exercise the authority of
the Board of Directors. Notwithstanding the foregoing, no
committee may: (a) authorize distributions; (b) approve or
propose to stockholders action that the Wisconsin Business
Corporation Law requires be approved by stockholders; (c) fill
vacancies on the Board of Directors or any of its committees,
except that the Board of Directors may provide by resolution that
any vacancies on a committee shall be filled by the affirmative
vote of a majority of the remaining committee members; (d) amend
the Articles of Incorporation; (e) adopt, amend or repeal Bylaws;
(f) approve a plan of merger not requiring stockholder approval;
(g) authorize or approve reacquisition of shares, except
according to a formula or method prescribed by the Board of
Directors; or (h) authorize or approve the issuance or sale or
contract for sale of shares, or determine the designation and
relative rights, preferences and limitations of a class or series
of shares, except within limits prescribed by the Board of
Directors.
Unless otherwise provided by the Board of Directors, members
of any committee shall serve at the pleasure of the Board of
Directors. The Board of Directors may elect one or more of its
members as alternate members of any such committee who may take
the place of any absent member or members at any meeting of such
committee, upon request by the Chairman of the Board or upon
request by the chairperson of such meeting. Each such committee
shall fix its own rules (consistent with the Wisconsin Business
Corporation Law, the Articles of Incorporation and these Bylaws)
governing the conduct of its activities and shall make such
reports to the Board of Directors of its activities as the Board
of Directors may request. Unless otherwise provided by the Board
of Directors in creating a committee, a committee may employ
counsel, accountants and other consultants to assist it in the
exercise of authority.
The provisions of Section 2.09 shall also apply to notice
and waiver of notice of meetings of any committee of the Board of
Directors.
2.13. Compensation. The Board of Directors, by
affirmative vote of a majority of the directors then in office,
and irrespective of any personal interest of any of its members,
may (a) establish reasonable compensation of all directors for
services to the corporation as directors, officers or otherwise,
and the manner and time and payment thereof, (b) provide for
reasonable pensions, disability or death benefits, and other
benefits or payments, to directors, officers and employees and to
their estates, families, dependents or beneficiaries on account
of prior services rendered by such directors, officers and
employees to the corporation, and (c) provide for reimbursement
of reasonable expenses incurred in the performance of directors'
duties.
2.14. Presumption of Assent. A director who is present
and is announced as present at a meeting of the Board of
Directors or a committee thereof at which action on any corporate
matter is taken shall be presumed to have assented to the action
taken unless (a) the director objects at the beginning of the
meeting or promptly upon his or her arrival to holding the
meeting or transacting business at the meeting, or (b) the
director's dissent or abstention from the action taken is entered
in the minutes of the meeting, or (c) the director delivers his
or her written notice of dissent or abstention to the presiding
officer of the meeting before the adjournment thereof or to the
corporation immediately after the adjournment of the meeting, or
(d) the director dissents or abstains from an action taken,
minutes of the meeting are prepared that fail to show the
director's dissent or abstention and the director delivers to the
corporation a written notice of that failure promptly after
receiving the minutes. Such right to dissent or abstain shall
not apply to a director who voted in favor of an action.
2.15. Director Unanimous Consent Without a Meeting. Any
action required or permitted by the Articles of Incorporation,
these Bylaws or any provision of law to be taken at a Board of
Directors meeting or committee meeting may be taken without a
meeting if the action is taken by all members of the Board or
committee. The action shall be evidenced by one or more written
consents describing the action taken, signed by each director and
retained by the corporation. Action taken hereunder is effective
when the last director signs the consent, unless the consent
specifies a different effective date. A consent signed hereunder
has the effect of a unanimous vote taken at a meeting at which
all directors or committee members were present, and may be
described as such in any document.
ARTICLE III.
OFFICERS
3.01. Appointment. The officers of the corporation shall
include a Chairman of the Board, a Vice Chairman of the Board, a
President, one or more Vice Presidents, a Treasurer, a Corporate
Secretary, and a Controller. The Chairman of the Board, the Vice
Chairman of the Board and the officers designated by the Board of
Directors as "executive officers" for purposes of the Securities
Exchange Act of 1934 shall be appointed by the Board of
Directors. The Board of Directors shall also designate a Chief
Executive Officer, a Chief Operating Officer and a Chief
Financial Officer. Such other officers and assistant officers as
may be deemed necessary may be appointed by the Board of
Directors or the Chief Executive Officer. Any two or more
offices may be held by the same person.
3.02. Resignation and Removal. An officer shall hold
office until he or she resigns, dies, is removed hereunder, or a
different person is appointed to the office. An officer may
resign at any time by delivering an appropriate written notice to
the corporation. The resignation is effective when the notice is
delivered, unless the notice specifies a later effective date and
the corporation accepts the later effective date. Any officer
may be removed from office by the affirmative vote of a majority
of the whole Board of Directors and, unless restricted by the
Board of Directors, any officer or assistant officer appointed by
the Chief Executive Officer may be removed by the Chief Executive
Officer, at any time, with or without cause and notwithstanding
the contract rights, if any, of the person removed. Except as
provided in the preceding sentence, the resignation or removal is
subject to any remedies provided by any contract between the
officer and the corporation or otherwise provided by law.
Appointment shall not of itself create contract rights.
3.03. Vacancies. A vacancy in any office because of
death, resignation, removal or otherwise, may be filled by the
Board of Directors or the Chief Executive Officer, as
appropriate. The Board of Directors or the Chief Executive
Officer, as appropriate, may, from time to time, omit to appoint
one or more officers or may omit to fill a vacancy, and in such
case, the designated duties of such officer, unless otherwise
provided in these Bylaws, shall be discharged by the Chief
Executive Officer or such other officers as he or she may
designate.
3.04. Powers and Duties. Subject to such limitations as
the Board of Directors may from time to time prescribe, the
officers of the corporation shall each have such powers and
duties as described below, as well as such powers and duties as
from time to time may be conferred by the Chief Executive Officer
or the Board of Directors.
Chairman of the Board
The Chairman of the Board shall:
* preside at all meetings of the stockholders and of the Board
of Directors; and
* perform all other duties incident to the office of Chairman
of the Board and any other duties as may be prescribed by the
Board of Directors.
Vice Chairman of the Board
The Vice Chairman of the Board shall:
* consult with, provide advice to, and otherwise assist the
Chairman of the Board; and
* perform such duties and have such authority as may be
delegated to him by the Chairman of the Board or the Board of
Directors.
In the absence of the Chairman of the Board or in the event of
the Chairman of the Board's death, inability to act, resignation
or removal from office, or pursuant to Article V ("Emergency
Provisions") of the Restated Articles of Incorporation of the
corporation, the powers and duties of the Chairman of the Board
shall for the time being devolve upon and be exercised by the
Vice Chairman of the Board, unless otherwise ordered by the Board
of Directors of the corporation.
Chief Executive Officer
The Chief Executive Officer shall:
* subject to the control of the Board of Directors, in
general, manage, supervise, and control all of the business,
property and affairs of the corporation;
* have authority to appoint officers and assistant officers of
the corporation, subject to any limitations that the Board of
Directors may from time to time prescribe; it being understood
that the Board of Directors continues to reserve its right to
also appoint officers and assistant officers and exclusive right
to appoint officers designated as "executive officers" for
purposes of the Securities Exchange Act of 1934, as provided in
Section 3.01;
* have authority to confer powers and duties to other officers
and assistant officers, including the authority to assign to the
other officers the authority for the management and control of
the business and affairs of the corporation, subject to any
limitations as the Board of Directors may from time to time
prescribe;
* have all powers and duties of supervision and management
usually vested in the general manager of a corporation, including
the supervision and direction of all other officers of the
corporation;
* have authority to appoint agents and employees of the
corporation to hold office at the discretion of the
Chief Executive Officer; prescribe their powers, duties and
compensation, and delegate authority to them;
* have the authority to sign, execute and acknowledge, on
behalf of the corporation, all deeds, mortgages, bonds, stock
certificates, contracts, leases, reports and all other documents
or instruments necessary or proper to be executed in the course
of the corporation's regular business, or which shall be
authorized by resolution of the Board of Directors; and, except
as otherwise provided by law or directed by the Board of
Directors, the Chief Executive Officer may authorize any other
officer or agent of the corporation to sign, execute and
acknowledge such documents or instruments in his or her stead;
and
* perform all other duties incident to the office of Chief
Executive Officer and any other duties as may be prescribed by
the Board of Directors.
President
The President shall:
* be the Chief Operating Officer of the corporation, unless
otherwise designated by the Board of Directors;
* subject to the control of the Chief Executive Officer,
direct certain operating functions; and
* perform the duties incident to the office of President and
any other duties as may be prescribed by the Chief Executive
Officer or the Board of Directors.
In the absence of the Chief Executive Officer or in the event of
the Chief Executive Officer's death, inability to act,
resignation or removal from office, or in the event for any
reason it shall be impracticable for the Chief Executive Officer
to act personally, the powers and duties of the Chief Executive
Officer shall for the time being devolve upon and be exercised by
the President, unless otherwise ordered by the Board of Directors
of the corporation.
Vice Presidents (including Executive Vice Presidents and Senior
Vice Presidents)
The Vice Presidents shall:
* perform such duties and have such authority as from time to
time may be delegated or assigned to them by the Chief Executive
Officer, President or the Board of Directors; and
* to the extent not so delegated or assigned, they have such
duties and authority as generally pertain to their office.
In case of the absence of the President or in the event of the
President's death, inability to act, resignation or removal from
office, or in the event for any reason it shall be impracticable
for the President to act personally, the powers and duties of the
President for the time being devolve upon and be exercised by a
Vice President (or, in the event there be more than one Vice
President, the Vice Presidents in the order designated by the
Chief Executive Officer, or in the absence of any designation,
then in the order of their appointment, unless otherwise ordered
by the Board of Directors of the corporation).
Chief Financial Officer
The Chief Financial Officer shall:
* subject to the control of the Board of Directors and the
Chief Executive Officer, in general, manage, supervise, and
control all of the financial affairs of the corporation;
* have responsibility over the office of the Treasurer and the
Controller;
* designate agents and employees of the corporation to (a)
have charge and custody and be responsible for all funds and
securities of the corporation, (b) receive, disburse and invest
funds of the corporation (c) negotiate and borrow short-term
unsecured funds and to issue and sell commercial paper and other
types of short-term unsecured indebtedness and (d) establish
depository and checking accounts at banks or other financial
institutions for various corporate purposes and act as
signatories for such accounts; and
* in general perform all other duties incident to the office
of the Chief Financial Officer and have such other duties and
exercise such other authority as from time to time may be
delegated or assigned by the Chief Executive Officer, President,
Vice President in charge, if any, or the Board of Directors.
Treasurer
The Treasurer, subject to the control of the Chief Financial
Officer, shall:
* have charge and custody of and be responsible for all funds
and securities of the corporation;
* receive, disburse and invest funds of the corporation, and
keep proper records thereof;
* negotiate and borrow short-term unsecured funds and issue
and sell commercial paper and other types of short-term unsecured
indebtedness;
* establish depository and checking accounts at banks or other
financial institutions for various corporate purposes; it being
understood that the Treasurer is hereby authorized to take any
action to administer these accounts, including acting as a
signatory with respect to such accounts; and
* in general perform all other duties incident to the office
of the Treasurer and have such other duties and exercise such
other authority as from time to time may be delegated or assigned
by Chief Executive Officer, President, Chief Financial Officer,
Vice President in charge, if any, or the Board of Directors.
In the absence of the Chief Financial Officer or in the event of
the Chief Financial Officer's death, inability to act,
resignation or removal from office, or in the event for any
reason it shall be impracticable for the Chief Financial Officer
to act personally, the powers and duties of the Chief Financial
Officer shall for the time being devolve upon and be exercised by
the Treasurer, unless otherwise ordered by the Board of Directors
of the corporation.
In the absence of the Treasurer or in the event of the
Treasurer's death, inability to act, resignation or removal from
office, or in the event for any reason it shall be impracticable
for the Treasurer to act personally, the powers and duties of the
Treasurer shall for the time being devolve upon and be exercised
by the Assistant Treasurer, unless otherwise ordered by the Board
of Directors of the corporation.
Corporate Secretary
The Corporate Secretary shall:
* keep (or cause to be kept) the minutes of the meetings of
the stockholders and of the Board of Directors and its committees
as permanent records;
* see that all notices are duly given in accordance with the
provisions of these Bylaws, or as required by law;
* be custodian of the corporate records and of the corporate
seal and see that the corporate seal is affixed to all documents,
the execution of which on behalf of the corporation under its
seal is duly authorized;
* keep or arrange for the keeping of a register of the post
office address of each stockholder, which shall be furnished to
the Corporate Secretary by such stockholder;
* sign, in accordance with provisions of these Bylaws,
certificates for shares of the corporation, the issuance of which
shall have been authorized by resolution of the Board of
Directors;
* have general charge of the stock transfer books of the
Corporation; and
* perform all other duties incident to the office of Corporate
Secretary and have such other duties and exercise such authority
as from time to time may be delegated or assigned by the Chief
Executive Officer, President, Vice President in charge, if any,
or the Board of Directors.
In the absence of the Corporate Secretary or in the event of the
Corporate Secretary's death, inability to act, resignation or
removal from office, or in the event for any reason it shall be
impracticable for the Corporate Secretary to act personally, the
powers and duties of the Corporate Secretary shall for the time
being devolve upon and be exercised by the Assistant Corporate
Secretary, unless otherwise ordered by the Board of Directors of
the corporation.
Controller
The Controller shall:
* be the principal accounting officer of the corporation,
unless otherwise designated by the Board of Directors;
* maintain proper audit control over the operations of the
corporation and be generally responsible for the accounting
system employed by the corporation;
* direct the budgetary control, general accounting, cost
accounting and statistical activities of the corporation;
* supervise activities in connection with credits and
collections, taxes and physical inventories;
* prepare and furnish reports and statements showing the
financial condition of the corporation as shall be required by
the Board of Directors, Chairman of the Board, Chief Executive
Officer or Chief Financial Officer; and
* in general perform all other duties incident to the office
of the Controller and have such other duties and exercise such
other authority as from time to time may be delegated or assigned
by the Chief Executive Officer, President, Chief Financial
Officer, Vice President in charge, if any, or the Board of
Directors.
3.05. Execution of Instruments. The execution of any
instrument of the corporation by any officer or assistant officer
shall be conclusive evidence, as to third parties, of his or her
authority to act on behalf of the corporation.
ARTICLE IV.
CERTIFICATES FOR SHARES AND THEIR TRANSFER
4.01. Stock Certificates and Facsimile Signatures. The
certificates for shares of stock of the corporation shall be
signed either manually or by facsimile signature by the Chief
Executive Officer, the President or a Vice President, and by the
Corporate Secretary or an Assistant Corporate Secretary of the
corporation, or any other officer or officers that the Board of
Directors designates, and may be sealed with the seal of the
corporation.
The certificates for shares shall be countersigned and
registered either manually or by facsimile signature in such
manner, if any, as the Board of Directors may from time to time
prescribe. The transfer agent and the registrar may, but need
not be, the same person or agency. In the event that the
corporation or its agent is acting in the dual capacity of
transfer agent and registrar, a single manual or facsimile
signature may be used.
In case any such person acting as an officer, transfer agent
or registrar, who has signed, or whose facsimile signature has
been placed upon such certificate, shall have ceased to be such
officer, transfer agent or registrar, before such certificate is
issued, it may be used by the corporation with the same effect as
if such person had not ceased to be such at the date of its
issue.
4.02. Transfer of Stock. The shares of stock of the
corporation shall be transferable on the books of the corporation
upon request by the holders thereof or by duly authorized
attorney, upon surrender and cancellation of certificates for a
like number of shares of the same class and series of stock, with
duly executed assignment and power of transfer endorsed thereon
or attached thereto, and with such proof of the authenticity of
the signature as the corporation or its agents may reasonably
require.
Prior to due presentment of a certificate for shares for
registration of transfer the corporation may treat the registered
owner of such shares as the person exclusively entitled to vote,
to receive notifications and otherwise to have and exercise all
the rights and powers of an owner. Where a certificate for
shares is presented to the corporation with a request to register
for transfer, the corporation shall not be liable to the owner or
any other person suffering loss as a result of such registration
of transfer if (a) there were on or with the certificate the
necessary endorsements, and (b) the corporation had no duty to
inquire into adverse claims or has discharged any such duty. The
corporation may require reasonable assurance that said
endorsements are genuine and effective and in compliance with
such other regulations as may be prescribed by or under the
authority of the Board of Directors.
4.03. Lost, Destroyed or Stolen Certificates. Where the
owner claims that his certificate for shares has been lost,
destroyed or wrongfully taken, a new certificate shall be issued
in place thereof if the owner (a) so requests before the
corporation has notice that such shares have been acquired by a
bona fide purchaser, (b) files with the corporation a sufficient
indemnity bond and (c) satisfies such other reasonable
requirements as may be prescribed by or under the authority of
the Board of Directors.
4.04. Shares Without Certificates. The Board of Directors
may authorize the issuance of any shares of any of its classes or
series without certificates. The authorization does not affect
shares already represented by certificates until the certificates
are surrendered to the corporation. Within a reasonable time
after the issuance or transfer of shares without certificates,
the corporation shall send the stockholder a written statement
that includes (1) all of the information required on share
certificates and (2) any transfer restrictions applicable to the
shares.
ARTICLE V.
INDEMNIFICATION
5.01. Mandatory Indemnification. The corporation shall
indemnify to the fullest extent permitted by law any person who
is or was a party or threatened to be made a party to any legal
proceeding by reason of the fact that such person is or was a
director or officer of the corporation, or is or was serving at
the request of the corporation as a director or officer of
another enterprise, against expenses (including attorney fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by the person in connection with such legal
proceeding.
5.02. Certain Definitions. As used in this Article V,
(a) "indemnify" includes the advancement of expenses upon receipt
of an undertaking to repay upon specified conditions,
(b) "fullest extent permitted by law" means the fullest extent to
which indemnity may lawfully be provided by, pursuant to or
consistently with, the provisions of Sections 180.0850 to
180.0859 of the Wisconsin Business Corporation Law (or any
successor provisions) or any other applicable law, whether
statutory or otherwise, (c) "person" includes the person's heirs,
executors and administrators, (d) "legal proceeding" means any
threatened, pending or completed action, suit or proceeding,
whether or not by or in right of the corporation, (e) "other
enterprise" includes any corporation, partnership, joint venture,
trust, dividend reinvestment plan, stock purchase plan, employee
benefit plan or other plan or entity, (f) "expenses" include
expenses in the enforcement of rights under this Bylaw and any
excise taxes assessed with respect to an employee benefit plan
and (g) in respect of any of such plans, (i) "serving at the
request of the corporation as a director or officer" includes
serving at the request of the corporation in any capacity that
involves services or duties with respect to the plan or its
participants or beneficiaries and (ii) action reasonably believed
to be in the interest of such participants or beneficiaries shall
be deemed reasonably believed to be in, or not opposed to, the
best interests of the corporation.
5.03. Legal Enforceability. The rights provided to any
person by the terms of this Article V shall be legally
enforceable against the corporation by such person, who shall be
presumed to have relied on the provisions of this Article V in
undertaking or continuing any of the positions with the
corporation or other enterprise referred to in Section 5.01.
5.04. Limitation on Modification or Termination. No
modification or termination of this Article V shall be effected
which would impair any rights hereunder arising at any time out
of events occurring prior to such modification or termination.
5.05. Non-Exclusive Bylaw. This Article V is not intended
to be exclusive and accordingly shall not be construed as
impairing in any way the power and authority of the corporation,
to the extent legally permissible without regard to this
Article V, in its discretion to indemnify or agree to indemnify,
or to purchase insurance indemnifying, any employee, agent or
other person.
ARTICLE VI.
OTHER INDEMNIFICATION PROVISIONS
6.01. Indemnification for Successful Defense. Within
twenty (20) days after receipt of a written request pursuant to
Section 6.03, the corporation shall indemnify a director or
officer, to the extent he or she has been successful on the
merits or otherwise in the defense of a proceeding, for all
reasonable expenses incurred in the proceeding if the director or
officer was a party because he or she is a director or officer of
the corporation.
6.02. Other Indemnification. (a) In cases not included
under Section 6.01, the corporation shall indemnify a director or
officer against all liabilities and expenses incurred by the
director or officer in a proceeding to which the director or
officer was a party because he or she is a director or officer of
the corporation, unless liability was incurred because the
director or officer breached or failed to perform a duty he or
she owes to the corporation and the breach or failure to perform
constitutes any of the following:
(1) A willful failure to deal fairly with the
corporation or its stockholders in connection with a matter
in which the director or officer has a material conflict of
interest.
(2) A violation of criminal law, unless the director
or officer had reasonable cause to believe that his or her
conduct was lawful or no reasonable cause to believe that
his or her conduct was unlawful.
(3) A transaction from which the director or officer
derived an improper personal profit.
(4) Willful misconduct.
(b) Determination of whether indemnification is required
under this Section or Article V shall be made pursuant to
Section 6.05.
(c) The termination of a proceeding by judgment, order,
settlement or conviction, or upon a plea of no contest or an
equivalent plea, does not, by itself, create a presumption that
indemnification of the director or officer is not required under
this Section.
6.03. Written Request. A director or officer who seeks
indemnification under Article V or Sections 6.01 or 6.02 shall
make a written request to the corporation.
6.04. Nonduplication. The corporation shall not indemnify
a director or officer under Sections 6.01 or 6.02 if the director
or officer has previously received indemnification or allowance
of expenses from any person, including the corporation, in
connection with the same proceeding. However, the director or
officer has no duty to look to any other person for
indemnification.
6.05. Determination of Right to Indemnification.
(a) Unless otherwise provided by the Articles of Incorporation or
by written agreement between the director or officer and the
corporation, the director or officer seeking indemnification
under Article V or Section 6.02 shall select one of the following
means for determining his or her right to indemnification:
(1) By a majority vote of a quorum of the Board of
Directors consisting of directors not at the time parties to
the same or related proceedings. If a quorum of
disinterested directors cannot be obtained, by majority vote
of a committee duly appointed by the Board of Directors and
consisting solely of two (2) or more directors who are not
at the time parties to the same or related proceedings.
Directors who are parties to the same or related proceedings
may participate in the designation of members of the
committee.
(2) By independent legal counsel selected by a quorum
of the Board of Directors or its committee in the manner
prescribed in sub. (1) or, if unable to obtain such a quorum
or committee, by a majority vote of the full Board of
Directors, including directors who are parties to the same
or related proceedings.
(3) By a panel of three (3) arbitrators consisting of
one arbitrator selected by those directors entitled under
sub. (2) to select independent legal counsel, one arbitrator
selected by the director or officer seeking indemnification
and one arbitrator selected by the two (2) arbitrators
previously selected.
(4) By an affirmative vote of shares represented at a
meeting of stockholders at which a quorum of the voting
group entitled to vote thereon is present. Shares owned by,
or voted under the control of, persons who are at the time
parties to the same or related proceedings, whether as
plaintiffs or defendants or in any other capacity, may not
be voted in making the determination.
(5) By a court under Section 6.08.
(6) By any other method provided for in any additional
right to indemnification.
(b) In any determination under (a), the burden of proof is
on the corporation to prove by clear and convincing evidence that
indemnification under Article V or Section 6.02 should not be
allowed.
(c) A written determination as to a director's or officer's
indemnification under Article V or Section 6.02 shall be
submitted to both the corporation and the director or officer
within 60 days of the selection made under (a).
(d) If it is determined that indemnification is required
under Article V or Section 6.02, the corporation shall pay all
liabilities and expenses not prohibited by Section 6.04 within
ten (10) days after receipt of the written determination under
(c). The corporation shall also pay all expenses incurred by the
director or officer in the determination process under (a).
6.06. Advance of Expenses. Within ten (10) days after
receipt of a written request by a director or officer who is a
party to a proceeding, the corporation shall pay or reimburse his
or her reasonable expenses as incurred if the director or officer
provides the corporation with all of the following:
(1) A written affirmation of his or her good faith
belief that he or she has not breached or failed to perform
his or her duties to the corporation.
(2) A written undertaking, executed personally or on
his or her behalf, to repay the allowance to the extent that
it is ultimately determined under Section 6.05 that
indemnification under Article V or Section 6.02 is not
required and that indemnification is not ordered by a court
under Section 6.08(b)(2). The undertaking under this
subsection shall be an unlimited general obligation of the
director or officer and may be accepted without reference to
his or her ability to repay the allowance. The undertaking
may be secured or unsecured.
6.07. Limitations on Indemnification. (a) Regardless of
the existence or rights under these Bylaws and additional rights
to indemnification under any agreement with the corporation, the
corporation shall not indemnify a director or officer, or permit
a director or officer to retain any allowance of expenses, unless
it is determined by or on behalf of the corporation that the
director or officer did not breach or fail to perform a duty he
or she owes to the corporation which constitutes conduct under
Section 6.02(a)(1), (2), (3) or (4). A director or officer who
is a party to the same or related proceedings for which
indemnification or an allowance of expenses is sought may not
participate in a determination under this subsection.
(b) Sections 6.01 to 6.12 do not affect the corporation's
power to pay or reimburse expenses incurred by a director or
officer in any of the following circumstances.
(1) As a witness in a proceeding to which he or she is
not a party.
(2) As a plaintiff or petitioner in a proceeding
because he or she is or was an employee, agent, director or
officer of the corporation.
6.08. Court-Ordered Indemnification. (a) Except as
provided otherwise by written agreement between the director or
officer and the corporation, a director or officer who is a party
to a proceeding may apply for indemnification to the court
conducting the proceeding or to another court of competent
jurisdiction. Application shall be made for an initial
determination by the court under Section 6.05(a)(5) or for review
by the court of an adverse determination under
Section 6.05(a) (1), (2), (3), (4) or (6). After receipt of an
application, the court shall give any notice it considers
necessary.
(b) The court shall order indemnification if it determines
any of the following:
(1) That the director or officer is entitled to
indemnification under Article V or Sections 6.01 or 6.02.
(2) That the director or officer is fairly and
reasonably entitled to indemnification in view of all the
relevant circumstances, regardless of whether
indemnification is required under Article V or Section 6.02.
(c) If the court determines under (b) that the director or
officer is entitled to indemnification, the corporation shall pay
the director's or officer's expenses incurred to obtain the
court-ordered indemnification.
6.09. Indemnification and Allowance of Expenses of
Employees and Agents. The corporation shall indemnify an
employee of the corporation who is not a director or officer of
the corporation, to the extent that he or she has been successful
on the merits or otherwise in defense of a proceeding, for all
reasonable expenses incurred in the proceeding if the employee
was a party because he or she was an employee of the corporation.
In addition, the corporation may indemnify and allow reasonable
expenses of an employee or agent who is not a director or officer
of the corporation to the extent provided by the Articles of
Incorporation or these Bylaws, by general or specific action of
the Board of Directors or by contract.
6.10. Insurance. The corporation may purchase and
maintain insurance on behalf of an individual who is an employee,
agent, director or officer of the corporation against liability
asserted against or incurred by the individual in his or her
capacity as an employee, agent, director or officer, regardless
of whether the corporation is required or authorized to indemnify
or allow expenses to the individual against the same liability
under Article V or Sections 6.01, 6.02, 6.06, 6.07 and 6.09.
6.11. Securities Law Claims. (a) Pursuant to the public
policy of the State of Wisconsin, the corporation shall provide
indemnification and allowance of expenses and may insure for any
liability incurred in connection with a proceeding involving
securities regulation described under (b) to the extent required
or permitted under Article V or Sections 6.01 to 6.10.
(b) Article V and Sections 6.01 to 6.10 apply, to the
extent applicable to any other proceeding, to any proceeding
involving a federal or state statute, rule or regulation
regulating the offer, sale or purchase of securities, securities
brokers or dealers, or investment companies or investment
advisers.
6.12. Liberal Construction. In order for the corporation
to obtain and retain qualified directors, officers and employees,
the foregoing provisions shall be liberally administered in order
to afford maximum indemnification of directors, officers and,
where Section 6.09 of these Bylaws applies, employees. The
indemnification above provided for shall be granted in all
applicable cases unless to do so would clearly contravene law,
controlling precedent or public policy.
ARTICLE VII.
CONTRACTS, CHECKS, NOTES, BONDS, ETC.
7.01. Contracts. The Board of Directors may authorize any
officer or officers, agent or agents, to enter into any contract
or execute or deliver any document or instrument, whether of
conveyance or otherwise, in the name of and on behalf of the
corporation, and such authorization may be general or confined to
specific instances.
7.02. Checks, Drafts, Etc. All checks and drafts on the
corporation's bank accounts and all bills of exchange and
promissory notes, and all acceptances, obligations and other
instruments for the payment of money, shall be signed or, in the
case of wire transfers, shall be authorized by such officer or
officers, employee or employees or agent or agents as shall be
thereunto authorized from time to time by the Board of Directors;
provided that checks drawn on the corporation's bank accounts may
bear the facsimile signature of such officer or officers,
employee or employees, or agent or agents as the Board of
Directors shall authorize; and provided further that in the case
of notes, bonds or debentures issued under a trust instrument of
the corporation and required to be signed by two officers of the
corporation, the signatures of either or both of such officers
may be in facsimile if specifically authorized and directed by
the Board of Directors of the corporation and if such notes,
bonds or debentures are required to be authenticated by a
corporate trustee which is a party to the trust instrument. In
case any such officer who has signed or whose facsimile signature
has been placed upon such instrument shall have ceased to be such
officer before such instrument is issued, it may be issued by the
corporation with the same effect as if such officer had not
ceased to be such at the date of its issue.
ARTICLE VIII.
FISCAL YEAR
The fiscal year of the corporation shall begin on the first
day of January in each year and shall end on the thirty-first day
of December following.
ARTICLE IX.
CORPORATE SEAL
The corporate seal shall have inscribed thereon the name of
the corporation and the words "Corporate Seal, Jan. 29, 1896."
ARTICLE X.
EFFECT OF HEADINGS
The descriptive headings and references to Articles and
Sections in these Bylaws were formulated, used and inserted
herein for convenience only and shall not be deemed to affect the
meaning or construction of any of the provisions hereof.
ARTICLE XI.
AMENDMENTS
11.01. By Stockholders. These Bylaws may be amended or
repealed and new Bylaws may be adopted by the stockholders by the
vote provided in Section 1.06 of these Bylaws except as
specifically provided below or in the Articles of Incorporation.
If authorized by the Articles of Incorporation, the stockholders
may adopt or amend a Bylaw that fixes a greater or lower quorum
requirement or a greater voting requirement for stockholders or
voting groups of stockholders than otherwise is provided in the
Wisconsin Business Corporation Law. The adoption or amendment of
a Bylaw that adds, changes or deletes a greater or lower quorum
requirement or a greater voting requirement for stockholders must
meet the same quorum requirement and be adopted by the same vote
and voting groups required to take action under the quorum and
voting requirement then in effect.
11.02. By Directors. Except as the Articles of
Incorporation may otherwise provide, these Bylaws may also be
amended or repealed and new Bylaws may be adopted by the Board of
Directors by the vote provided in Sections 2.10 and 2.11, but
(a) no Bylaw adopted by the stockholders shall be amended,
repealed or readopted by the Board of Directors if such Bylaw
provides that it may not be amended, repealed or readopted by the
Board of Directors and (b) a Bylaw adopted or amended by the
stockholders that fixes a greater or lower quorum requirement or
a greater voting requirement for the Board of Directors than
otherwise is provided in the Wisconsin Business Corporation Law
may not be amended or repealed by the Board of Directors unless
the Bylaw expressly provides that it may be amended or repealed
by a specified vote of the Board of Directors. Action by the
Board of Directors to adopt or amend a Bylaw that changes the
quorum or voting requirement for the Board of Directors must meet
the same quorum requirement and be adopted by the same vote
required to take action under the quorum and voting requirement
then in effect, unless a different voting requirement is
specified as provided by the preceding sentence. A Bylaw that
fixes a greater or lower quorum requirement or a greater voting
requirement for stockholders or voting groups of stockholders
than otherwise is provided in the Wisconsin Business Corporation
Law may not be adopted, amended or repealed by the Board of
Directors.
11.03. Implied Amendments. Any action taken or authorized
by the stockholders or by the Board of Directors, which would be
inconsistent with the Bylaws then in effect but is taken or
authorized by a vote that would be sufficient to amend the Bylaws
so that the Bylaws would be consistent with such action, shall be
given the same effect as though the Bylaws had been temporarily
amended or suspended so far, but only so far, as is necessary to
permit the specific action so taken or authorized.
11.04. Certain Voting Requirements Preserved. If the
corporation had a Bylaw in effect on December 31, 1990, that
establishes a greater shareholder voting requirement than one
required under the Wisconsin Business Corporation Law, that
voting requirement applies until the Bylaw is amended or
repealed.
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE UNAUDITED FINANCIAL STATEMENTS OF
WISCONSIN ELECTRIC POWER COMPANY FOR THE THREE
MONTHS ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000
<S> <C>
<CURRENCY> U.S.DOLLARS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<PERIOD-TYPE> 3-MOS
<EXCHANGE-RATE> 1
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> <F1> 3,198,891
<OTHER-PROPERTY-AND-INVEST> <F2> 694,110
<TOTAL-CURRENT-ASSETS> 512,147
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 553,558
<TOTAL-ASSETS> 4,958,706
<COMMON> 332,893
<CAPITAL-SURPLUS-PAID-IN> 530,689
<RETAINED-EARNINGS> 1,030,916
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,894,498
0
30,450
<LONG-TERM-DEBT-NET> 1,319,106
<SHORT-TERM-NOTES> 50,400
<LONG-TERM-NOTES-PAYABLE> 170,016
<COMMERCIAL-PAPER-OBLIGATIONS> 66,688
<LONG-TERM-DEBT-CURRENT-PORT> 1,905
0
<CAPITAL-LEASE-OBLIGATIONS> 182,540
<LEASES-CURRENT> 28,392
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,214,711
<TOT-CAPITALIZATION-AND-LIAB> 4,958,706
<GROSS-OPERATING-REVENUE> 540,778
<INCOME-TAX-EXPENSE> 37,251
<OTHER-OPERATING-EXPENSES> 450,985
<TOTAL-OPERATING-EXPENSES> <F3> 450,985
<OPERATING-INCOME-LOSS> <F3> 89,793
<OTHER-INCOME-NET> 35,122
<INCOME-BEFORE-INTEREST-EXPEN> <F4> 124,915
<TOTAL-INTEREST-EXPENSE> 28,825
<NET-INCOME> <F5> 58,839
301
<EARNINGS-AVAILABLE-FOR-COMM> 58,538
<COMMON-STOCK-DIVIDENDS> 44,893
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 294,979
<EPS-BASIC> <F6> 0
<EPS-DILUTED> <F6> 0
<FN>
<F1> TOTAL NET UTILITY PLANT IS $3,203,768 OF NET PROPERTY,
PLANT AND EQUIPMENT LESS $4,877 OF NET NON-UTILITY
PROPERTY.
<F2> OTHER PROPERTY AND INVESTMENTS IS $689,233 OF INVESTMENTS
PLUS $4,877 OF NET NON-UTILITY PROPERTY.
<F3> TOTAL OPERATING EXPENSES AND OPERATING INCOME OR LOSS
EXCLUDE INCOME TAXES OF $37,251.
<F4> INCOME BEFORE INTEREST EXPENSE AND INCOME TAXES.
<F5> NET INCOME IS AFTER INCOME TAXES OF $37,251.
<F6> EARNINGS PER SHARE OF COMMON STOCK IS NOT APPLICABLE
BECAUSE ALL OF WISCONSIN ELECTRIC'S COMMON STOCK IS OWNED
BY WISCONSIN ENERGY CORPORATION.
SEE FINANCIAL STATEMENTS AND NOTES IN THE ACCOMPANYING 10-Q.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE UNAUDITED FINANCIAL STATEMENTS OF
WISCONSIN ELECTRIC POWER COMPANY FOR THE THREE
MONTHS ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
THIS SCHEDULE REFLECTS RECLASSIFICATION OF AMOUNTS
TO CONFORM TO THE COMPANY'S CURRENT FINANCIAL
STATEMENT PRESENTATION.
<S> <C>
<MULTIPLIER> 1,000
<CURRENCY> U.S.DOLLARS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<PERIOD-TYPE> 3-MOS
<EXCHANGE-RATE> 1
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> <F1> 3,178,320
<OTHER-PROPERTY-AND-INVEST> <F2> 608,545
<TOTAL-CURRENT-ASSETS> 524,777
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 450,919
<TOTAL-ASSETS> 4,762,561
<COMMON> 332,893
<CAPITAL-SURPLUS-PAID-IN> 380,689
<RETAINED-EARNINGS> 995,664
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,709,246
0
30,450
<LONG-TERM-DEBT-NET> 1,169,634
<SHORT-TERM-NOTES> 50,495
<LONG-TERM-NOTES-PAYABLE> 170,920
<COMMERCIAL-PAPER-OBLIGATIONS> 115,975
<LONG-TERM-DEBT-CURRENT-PORT> 92,905
0
<CAPITAL-LEASE-OBLIGATIONS> 188,938
<LEASES-CURRENT> 25,848
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,208,150
<TOT-CAPITALIZATION-AND-LIAB> 4,762,561
<GROSS-OPERATING-REVENUE> 527,839
<INCOME-TAX-EXPENSE> 30,761
<OTHER-OPERATING-EXPENSES> 425,381
<TOTAL-OPERATING-EXPENSES> <F3> 425,381
<OPERATING-INCOME-LOSS> <F3> 102,458
<OTHER-INCOME-NET> 12,180
<INCOME-BEFORE-INTEREST-EXPEN> <F4> 114,638
<TOTAL-INTEREST-EXPENSE> 27,916
<NET-INCOME> <F4> 55,961
301
<EARNINGS-AVAILABLE-FOR-COMM> 55,660
<COMMON-STOCK-DIVIDENDS> 44,893
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 168,295
<EPS-BASIC> <F5> 0
<EPS-DILUTED> <F5> 0
<FN>
<F1> TOTAL NET UTILITY PLANT IS $3,182,825 OF NET PROPERTY,
PLANT AND EQUIPMENT LESS $4,505 OF NET NON-UTILITY
PROPERTY.
<F2> OTHER PROPERTY AND INVESTMENTS IS $604,040 OF INVESTMENTS
PLUS $4,505 OF NET NON-UTILITY PROPERTY.
<F3> TOTAL OPERATING EXPENSES AND OPERATING INCOME OR LOSS
EXCLUDE INCOME TAXES OF $30,761.
<F4> INCOME BEFORE INTEREST EXPENSE AND OPERATING INCOME OR
LOSS ARE AFTER INCOME TAXES OF $30,761.
<F5> EARNINGS PER SHARE OF COMMON STOCK IS NOT APPLICABLE
BECAUSE ALL OF WISCONSIN ELECTRIC'S COMMON STOCK IS OWNED
BY WISCONSIN ENERGY CORPORATION.
SEE FINANCIAL STATEMENTS AND NOTES IN THE ACCOMPANYING 10-Q.
</FN>
</TABLE>
