Exhibit 99.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20594
----------------------------------
Financial statements and schedules furnished in lieu of the
FORM 11-K
Annual Report
Pursuant to Rule 15d-21 under the
Securities Exchange Act of 1934
-------------------------------
For the fiscal year ended December 31, 1999
A. Full title of the Plan and the address of the Plan, if different
from that of the issuer named below:
WISCONSIN ELECTRIC POWER COMPANY
Employee Retirement Savings Plan
B. Name of issuer of the securities held pursuant to the Plan and
the address of its principal execute office:
Wisconsin Energy Corporation
231 West Michigan Street
P.O. Box 2949
Milwaukee, WI 53201
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Administrator has duly caused this annual report to be signed by the
undersigned thereunto duly authorized.
WISCONSIN ELECTRIC POWER COMPANY
EMPLOYEE RETIREMENT SAVINGS PLAN
--------------------------------
Name of Plan
June 23, 2000 By /s/Calvin H. Baker
--------------------------------
Calvin H. Baker
Plan Administrator
Wisconsin Electric
Power Company
Employee Retirement
Savings Plan
Financial Statements and Report
December 31, 1999 and 1998
Wisconsin Electric Power Company
Employee Retirement Savings Plan
Index to Financial Statements
Report of Independent Accountants
Statements of Net Assets Available for Benefits as of
December 31, 1999 and 1998
Statements of Changes in Net Assets Available for Benefits
for the years ended December 31, 1999 and 1998
Notes to Financial Statements
Schedules Required by the Department of Labor's Rules and Regulations:*
Form 5500, Schedule of Assets Held for Investment Purposes
at End of Year as of December 31, 1999
* Other schedules required by the Department of Labor have been omitted because
they are not applicable.
Report of Independent Accountants
To the Participants and Plan Administrator of the
Wisconsin Electric Power Company
Employee Retirement Savings Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Wisconsin Electric Power Company Employee Retirement Savings Plan (the
"Plan") at December 31, 1999 and 1998, and the changes in net assets available
for benefits for the years then ended, in conformity with accounting principles
generally accepted in the United States. These financial statements are the
responsibility of the Plan's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States, which require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of Assets Held
for Investment Purposes at End of Year is presented for the purpose of
additional analysis and is not a required part of the basic financial statements
but is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/PricewaterhouseCoopers LLP
------------------------------------------
PRICEWATERHOUSECOOPERS LLP
Milwaukee, Wisconsin
June 7, 2000
<TABLE>
Wisconsin Electric Power Company
Employee Retirement Savings Plan
Statements of Net Assets Available for Benefits
December 31, 1999 and 1998
--------------------------------------------------------------------------------
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Assets
Investments (See Note 3) $552,629,548 $460,763,002
Cash 685,121 1,335,145
------------ ------------
Net assets available for benefits $553,314,669 $462,098,147
============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<TABLE>
Wisconsin Electric Power Company
Employee Retirement Savings Plan
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 1999 and 1998
--------------------------------------------------------------------------------
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Additions
---------
Additions to net assets attributed to:
Investment income:
Interest and dividends $35,794,997 $23,316,534
Net appreciation in fair value of
investments 20,383,798 36,488,660
------------ ------------
56,178,795 59,805,194
------------ ------------
Contributions:
Participants' 32,058,293 30,229,463
Employer's 8,559,449 7,793,332
------------ ------------
40,617,742 38,022,795
------------ ------------
Total additions 96,796,537 97,827,989
Deductions
----------
Deductions from net assets attributed to:
Administrative expenses 40,401 30,300
Benefits paid to participants 14,858,902 14,236,649
------------ ------------
Total deductions 14,899,303 14,266,949
------------ ------------
Net increase prior to plan transfer 81,897,234 83,561,040
Transfer from another plan (See Note 1) 9,319,288 -
------------ ------------
Net increase 91,216,522 83,561,040
Net assets available for benefits:
Beginning of year 462,098,147 378,537,107
------------ ------------
End of year $553,314,669 $462,098,147
============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
Wisconsin Electric Power Company
Employee Retirement Savings Plan
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------
1. Description of the Plan
The following description of the Wisconsin Electric Power Company ("WE" or
the "Company") Employee Retirement Savings Plan ("ERSP" or the "Plan")
provides only general information. Participants should refer to the plan
agreement for a more comprehensive description of the Plan's provisions.
General
The Plan is a defined contribution plan covering all employees of WE who
are projected to complete at least 1,000 hours of service within one year
from hire date. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA").
During 1999, the Plan was amended to reflect the merger of the Bargaining
Unit Savings Plan of Edison Sault Electric Company and the Employee
Incentive and Stock Plan of Edison Sault Electric Company. Net assets
totaling $9,319,288 were transferred to the Plan.
Contributions
Contributions are subject to certain limitations of the Internal Revenue
Code ("IRC"). Participants are allowed to make a pre-tax contribution of
up to 20% of their base wages, as defined in the Plan. Participants are
also allowed to contribute to the Plan on a post tax basis and may
contribute amounts representing distributions from other qualified defined
benefit or defined contribution plans. The Company matches 50% of the
first 6% of wages up to a maximum contribution of 3% of qualified
compensation, as defined in the Plan. All employer contributions are
initially invested in the Wisconsin Energy Corporation ("WEC") Common Stock
Fund.
Participant Accounts
Each participant's account is credited with the participant's contribution
and allocations of (a) the Company's contribution and (b) Plan earnings.
Allocations of plan earnings are based on participant account balances in
relation to total fund account balances as defined in the Plan. Earnings
on investments are not taxed while such amounts accumulate in the Plan.
The benefit to which a participant is entitled is the benefit that can be
provided from the participant's vested account balance. Forfeited balances
of terminated participants' nonvested accounts are used to reduce future
employer contributions.
Vesting
Participants are immediately vested in their contributions plus actual
earnings thereon. Vesting in the Company's matching contribution portion
of their account plus actual earnings thereon occurs after the participant
achieves 1,000 hours of service.
Investment Options
Participant contributions may be allocated, in whole percentages, to any of
various investment options offered by the Plan. Participants may change
their investment options daily.
The value of participant investments in the Blended Rate Income Fund grows
through earnings at negotiated interest rates, while investment growth
(loss) in mutual funds results from dividends plus a net increase
(decrease) in the market value of securities in the fund.
Participant Withdrawals and Terminations
The full value of a participant's ERSP account is distributed through a
lump-sum cash payment to the employee or designated beneficiary upon
retirement, termination of employment or death, for account balances less
than $5,000. Distributions of participant account balances of $5,000 or
greater are based on participant elections in accordance with the Plan
provisions.
As the Plan is primarily designed to meet long-term financial needs,
employees may permanently withdraw amounts from their accounts under the
terms of the Plan's financial hardship withdrawal guidelines.
Additionally, participants may withdraw all or a portion of the value of
their after-tax contributions, however, this withdrawal is limited to once
per Plan year.
Participant Notes Receivable
Participants may borrow from their fund accounts up to the lesser of 50% of
their account balance or $50,000, reduced by the highest outstanding loan
balance over the past 12 months. Loans are repayable monthly over periods
not to exceed 5 years. The interest rate charged on participant loans is
fixed at the beginning of each loan at prime rate plus 1%.
Plan Termination
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of
Plan termination, participants will become 100% vested in their accounts.
Administration
A trustee is utilized in connection with the operation of the Plan. The
Chief Financial Officer and Vice President-Finance of WE serves as the Plan
Administrator.
2. Significant Accounting Policies
Basis of Accounting
The Plan's financial statements are prepared under the accrual basis of
accounting.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
changes therein, and disclosure of contingent assets and liabilities.
Actual results could differ from those estimates.
Investment Valuation
The investments of the Plan are stated at fair value, except for its
investments in guaranteed investment contracts which are stated at contract
value. Participant loans are stated at cost which approximates fair value.
Shares of mutual funds and common stock are valued at quoted market prices
on the last day of the plan year.
The Plan's investments in traditional guaranteed investment contracts and
synthetic guaranteed investment contracts are valued at contract value
because participants may ordinarily direct the withdrawal or transfer of
all or a portion of their investment at contract value. Contract value
represents contributions made under the contract, plus earnings, less
withdrawals and administrative expenses. The contract value of the Plan's
investments in guaranteed investment contracts approximates fair value at
December 31, 1999 and 1998.
The average yield for the Plan's investments in guaranteed investment
contracts was 6.0% and 6.3% for the years ending December 31, 1999 and
1998, respectively. The crediting interest rate was 5.9% and 5.7% as of
December 31, 1999 and 1998, respectively.
Risks and Uncertainties
The Plan's investments are exposed to various risks, such as interest rate,
market and credit risks. Due to the level of risk associated with certain
investments and the level of uncertainty related to changes in the values
of investments, it is at least reasonably possible that changes in risks in
the near term could materially affect participants' account balances and
the amounts reported in the statements of net assets available for benefits
and the statements of changes in net assets available for benefits.
Income Recognition
The Plan presents in the statements of changes in net assets available for
benefits the net appreciation in the fair value of its investments, which
consists of the realized gains or losses and the unrealized appreciation
(depreciation) on those investments.
Interest and dividends are recorded as earned.
Payments of Benefits
Benefits are recorded when paid.
Administrative Expenses
All significant administrative expenses are paid by the Company, except for
loan origination fees which are paid by the borrowing participant and
charged against the fund from which the borrowings are made.
Reclassifications
Certain reclassifications have been made to the December 31, 1998 financial
statements to conform to the presentation used in the current year.
3.
Investments
The following presents investments that represent 5% or more of the Plan's
net assets:
<TABLE>
<CAPTION>
December 31,
--------------------------------------
---
1999 1998
------------ ------------
<S> <C> <C>
WEC Common Stock, 4,702,518 and
3,496,250 shares, respectively $90,523,472 $109,914,813
Fidelity Equity Income Fund, 1,590,167 and
1,467,790 shares, respectively 85,042,129 81,535,742
Fidelity Growth Company Fund, 1,700,984 and
1,354,683 shares, respectively 143,392,914 69,115,947
Fidelity U.S. Equity Index Commingled Pool,
1,812,046 and 1,682,467 shares, respectively 76,214,639 58,617,135
</TABLE>
During 1999 and 1998, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated
in value by $20,383,798 and $36,488,660, respectively, as follows:
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Mutual funds $52,269,985 $14,740,045
Collective trust fund 12,984,530 12,311,002
Common stock (44,870,717) 9,437,613
----------- -----------
$20,383,798 $36,488,660
=========== ===========
</TABLE>
4. Tax Status
The Internal Revenue Service has determined and informed the Company by a
letter dated September 21, 1995, that the Plan is designed in accordance
with applicable sections of the IRC. The Plan has been amended since
receiving the determination letter. However, the plan administrator and
the Plan's tax counsel believe that the Plan is designed and is currently
being operated in compliance with the applicable requirements of the IRC.
5. Amounts Allocated to Withdrawn Participants
Plan assets of $112,294,075 and $86,312,273 have been allocated to the
accounts of persons who are no longer active participants of the Plan as of
December 31, 1999 and 1998, respectively.
6. Unitization of the WEC Common Stock Fund
The WEC Common Stock Fund is accounted for on a unitary basis. At
December 31, 1999, there were 9,086,423.348 units in the fund with a net
asset value of $10.04 per unit. At December 31, 1998, there were
6,812,612.273 units in the fund with a net asset value of $16.33 per unit.
7. Party-in-interest Transactions
Certain plan investments represent shares of mutual funds managed by
Fidelity Management Trust Company, shares of employer securities, and
participant loans. These transactions are considered party-in-interest
transactions. These transactions are not, however, considered prohibited
transactions under 29 CFR 408(b) of the ERISA regulations.
<TABLE>
Wisconsin Electric Power Company
Employee Retirement Savings Plan
Form 5500, Schedule of Assets Held for Investment Purposes at End of Year
December 31, 1999
--------------------------------------------------------------------------------
<CAPTION>
Identity of issue, borrower, Description of investment including Current
lessor, or similar party maturity date and rate of interest Value
--------------------------------- -------------------------------------- -------------
<S> <C> <C>
* WEC Common Stock Common stock $90,523,472
* Fidelity Equity Income Fund Mutual fund 85,042,129
* Fidelity Growth Company Fund Mutual fund 143,392,914
* Fidelity U.S. Equity Index
Commingled Pool Collective trust fund 76,214,639
* Fidelity Balanced Fund Mutual fund 22,713,314
* Fidelity Retirement Government
Money Market Portfolio Mutual fund 5,196,695
* Fidelity U.S. Bond Index Portfolio Mutual fund 7,400,850
* Fidelity Overseas Fund Mutual fund 26,358,113
* Fidelity Low-Priced Stock Fund Mutual fund 18,356,243
* Fidelity Institutional Money Market Money market fund 2,060,496
* Participant Loans Participant notes receivable 8,393,350
Varied maturities from 2000 to 2005
Interest rates range from 7% to 10%
AIG Financial Produts Synthetic Guaranteed
Investment Contract
CARCO, 6.70%
Maturity - 11/15/2002
Contract 1999-4 (A) CARCO 1,985,403
Synthetic Guaranteed
Investment Contract Wrapper 12,493
</TABLE>
<TABLE>
Wisconsin Electric Power Company
Employee Retirement Savings Plan
Form 5500, Schedule of Assets Held for Investment Purposes at End of Year
December 31, 1999
--------------------------------------------------------------------------------
<CAPTION>
Description of investment including Current
Identity of Issuer maturity date and rate of interest Value
--------------------------------- -------------------------------------- -------------
<S> <C> <C>
Chase Manhattan Synthetic Guaranteed
Investment Contract
Sears Credit Account
Master Trust, 5.15%
Maturity - 03/15/2002 2,668,946
Synthetic Guaranteed
Investment Contract Wrapper 53,358
Chase Manhattan Synthetic Guaranteed
Investment Contract
FUSAM, 5.30%
Maturity - 07/17/2002
Contract 1997-6A 2,082,269
Synthetic Guaranteed
Investment Contract Wrapper 81,243
Deutsche Bank Synthetic Guaranteed
Investment Contract
Olympic Auto Trust, 6.12%
Maturity - 12/15/2000
Contract 1996-D A4 1,203,526
Synthetic Guaranteed
Investment Contract Wrapper 612
Monumental Life Insurance Synthetic Guaranteed
Investment Contract
FIRST SEC AUTO, 5.51%
Maturity - 11/17/2003
Contract 99-1 (A4) FSAOT 1,954,762
Synthetic Guaranteed
Investment Contract Wrapper 63,887
Monumental Life Insurance Synthetic Guaranteed
Investment Contract
Discover Card Master Trust, 5.40%
Maturity - 11/17/2003
Contract 199 1,919,311
Synthetic Guaranteed
Investment Contract Wrapper 107,579
Monumental Life Insurance Synthetic Guaranteed
Investment Contract
AMERICREDIT, 5.54%
Maturity - 04/05/2004
Contract 99-B A4 AMCAR FSA 2,452,886
Synthetic Guaranteed
Investment Contract Wrapper 85,923
Morgan Guaranty Synthetic Guaranteed
Investment Contract
AMERICAN EXPRESS, 5.71%
Maturity - 04/15/2004
Contract 99-1 A AMXCA 1,905,778
Synthetic Guaranteed
Investment Contract Wrapper 95,559
State Street Synthetic Guaranteed
Investment Contract
Premier Auto Trust, 5.88%
Maturity - 04/08/2002
Contract 1998-2A4 2,477,104
Synthetic Guaranteed
Investment Contract Wrapper 32,532
Transamerica Life Insurance Synthetic Guaranteed
Investment Contract
Dayton Hudson Credit Card Trust,
6.4% 1,776,225
Maturity - 10/25/2002
Synthetic Guaranteed
Investment Contract Wrapper 43,864
Transamerica Life Insurance Synthetic Guaranteed
Investment Contract
Ford Auto Loan Master Trust, 5.69%
Maturity - 02/15/2001
Contract 19 2,264,395
Synthetic Guaranteed
Investment Contract Wrapper 26,894
Westdeutsche Landesbank Synthetic Guaranteed
Investment Contract
KEY AUTO, 5.39%
Maturity - 12/15/2003
Contract 1999-1 (A4) KAFT 1,959,245
Synthetic Guaranteed
Investment Contract Wrapper 68,171
Morgan Guaranty Synthetic Guaranteed
Investment Contract
FHLMC, 6.59%
Maturity - 01/15/2004
Contract 5 01/15/2004 1,919,231
Synthetic Guaranteed
Investment Contract Wrapper 17,143
AIG Financial Products Synthetic Guaranteed
Investment Contract
Fannie Mae, 5.85%
Maturity - 06/25/2002
Contract 1993-41 PG 2,493,367
Synthetic Guaranteed
Investment Contract Wrapper 21,326
Monumental Life Insurance Synthetic Guaranteed
Investment Contract
Freddie Mac, 8.11%
Maturity - 02/15/2001
Contract 1667 PD 1,250,089
Synthetic Guaranteed
Investment Contract Wrapper (10,204)
Monumental Life Insurance Synthetic Guaranteed
Investment Contract
Fannie Mae, 6.09%
Maturity - 04/25/2003
Contract 1994-30G 1,973,120
Synthetic Guaranteed
Investment Contract Wrapper 28,941
Morgan Guaranty Synthetic Guaranteed
Investment Contract
Freddie Mac, 5.88%
Maturity - 04/15/2003
Contract 1661 PG 2,965,290
Synthetic Guaranteed
Investment Contract Wrapper 53,378
State Street Synthetic Guaranteed
Investment Contract
Fannie Mae, 6.70%
Maturity - 03/25/2002
Contract 1993-72D 1,248,402
Synthetic Guaranteed
Investment Contract Wrapper (1,601)
State Street Synthetic Guaranteed
Investment Contract
Freddie Mac, 6.64%
Maturity - 10/15/2001
Contract 1737 E 1,702,174
Synthetic Guaranteed
Investment Contract Wrapper (2,010)
State Street Synthetic Guaranteed
Investment Contract
Freddie Mac, 6.81%
Maturity - 05/15/2000
Contract 1489 F 129,699
Synthetic Guaranteed
Investment Contract Wrapper (83)
UBS AG Synthetic Guaranteed
Investment Contract
Freddie Mac, 6.33%
Maturity - 01/15/2003
Contract 1666 E 1,482,645
Synthetic Guaranteed
Investment Contract Wrapper 14,053
AI Life 6.42%, Maturity - 10/02/2000
Contract GIC925 3,047,422
Combined 6.76%, Maturity - 07/31/2003
Contract CG1130 3,094,469
GE Life and Annuity 6.58%, Maturity - 07/01/2002
Contract GS3316 2,061,330
New York Life 6.63%, Maturity - 09/30/2003
Contract GA31003 3,092,471
Ohio National 6.33%, Maturity - 12/09/2000
Contract GA5812 2,413,260
Principal 6.61%, Maturity - 07/01/2002
Contract 42905201 4,682,718
Protective 6.64%, Maturity - 01/03/2000
Contract GA1359** 1,814,280
Southland 6.56%, Maturity - 03/31/2000
Contract SL180GIC 2,032,642
Sunamerica 6.35%, Maturity - 09/30/2001
Contract 4749SUNAM 1,141,574
Transamerica Occidental 7.00%, Maturity - 04/30/2001
Contract 51444-00 2,990,242
</TABLE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8
(No. 333-86467) of Wisconsin Energy Corporation of our report dated June 7, 2000
relating to the financial statements of the Wisconsin Electric Power Company
Employee Retirement Savings Plan which appears in this Exhibit 99.1 filed with
Amendment No. 2 (on Form 10-K/A) to the Wisconsin Energy Corporation Annual
Report on Form 10-K for the year ended December 31, 1999.
/s/PricewaterhouseCoopers LLP
-----------------------------
PRICEWATERHOUSECOOPERS LLP
Milwaukee, Wisconsin
June 23, 2000
