Wisconsin Energy reports rise in profits for 2001

MILWAUKEE, Feb. 9, 2002 — Wisconsin Energy Corp. reported annual adjusted earnings per share of $2.04 for 2001, compared with annual adjusted earnings per share of $1.51 in 2000.

The $0.53 per share increase reflected a strong performance by the regulated electric and gas businesses, the favorable impact of the share repurchase program, stable manufacturing earnings in light of a soft economy and the benefit of a full year operation of Wisvest Connecticut.

The adjusted 2001 earnings exclude net losses on investments of $0.07 per share and charges for the new accounting standard on derivatives of $0.11 per share. The 2000 adjusted earnings exclude non-recurring charges of $0.69 per share, gains on asset sales of $0.45 per share and reflects WICOR operations for the full year.

Reported earnings per share for 2001 were $1.86, or 46 percent higher than last year’s reported earnings per share of $1.27.

Fourth quarter adjusted earnings were $0.60 per share in 2001 as compared with adjusted fourth quarter earnings of $0.48 per share in the prior year. This $0.12 per share increase in adjusted earnings was primarily attributable to improved recovery of fuel and purchased power costs and reduced operating and net interest costs within the regulated energy segment. These improvements were partially offset by unseasonably warm weather in the fourth quarter which reduced natural gas and electric sales.

“I am pleased with the company’s financial performance this year,” said Richard A. Abdoo, chairman, president and chief executive officer of WEC. “We have successfully completed the first year of our growth strategy with strong earnings in spite of a soft economy and record warmth in the fourth quarter which depressed utility earnings by about $0.12 per share.”

Utility segment

The utility segment of WEC recorded revenues of $2,965 million and reported adjusted net earnings of $281 million for the year, representing an increase in pro forma (as if WICOR were included for the full year in 2000) revenues and net earnings of $192 million and $38 million, respectively.

“I am very proud of the hard work of our electric and gas employees,” said Richard R. Grigg, president and chief operating officer of Wisconsin Electric-Wisconsin Gas. “Through their efforts we successfully combined our utility operations, improving customer service and reducing operating costs.”

Electric business

Electric utility revenues for the year totaled $1,867 million, an increase of $70 million or 3.9 percent when compared with the prior year. This increase reflected approximately $90 million in price increases to cover increased fuel, purchased power and other operating costs, and a return to normal summer weather. This was offset in part by a decline in electric deliveries to industrial and large commercial customers, reflecting the softening of the overall economy.

“Wisconsin Electric was able to recover its fuel and purchased power costs this year, thanks to the interim price increases and the strong operations of our plants,” said Grigg.

Gas business

Gas utility revenues for the year totaled $1,074 million, an increase of $122 million or 12.8 percent, when compared with the prior year on a pro forma basis. The increase was directly related to increased natural gas costs for the year, which are passed through to customers on a dollar for dollar basis.

Gas margins for the year totaled $323 million, almost a $16 million decline from last year on a pro forma basis. For the year, heating degree days were almost 6 percent less than the prior year. The gas revenues and margins were severely hurt by the extremely mild fourth quarter in 2001, as contrasted with a colder than normal fourth quarter in 2000. Gas revenues and gas margins declined in the fourth quarter of 2001 by $165 million and $25 million, respectively, when compared to the fourth quarter of 2000.

Manufacturing segment

The company’s WICOR manufacturing operations recorded annual revenues of $585 million, an increase of $10 million when compared with the prior year. The manufacturing segment was negatively impacted by the national economic slowdown. Earnings, excluding WICOR merger-related costs, were $29 million, slightly better than a year ago on a pro forma basis.

Non-Utility Energy segment

The WEC non-utility energy segment recorded annual earnings during 2001 of $15 million before a net SFAS 133 after-tax charge of $13 million. This segment benefited from improved earnings at the Wisvest Connecticut operations, an investment that is held for sale.

Under accounting standards that became effective in the first quarter of 2001, contracts used by Wisvest Connecticut to mitigate its exposure to fluctuations in the market price of fuel oil are considered derivative instruments, requiring the company to record these contracts at fair value.

Significant declines in the market price of fuel oil in the third and fourth quarters resulted in after-tax, non-cash charges to earnings of $23 million, or $0.20 per share. In the first quarter, the company recorded a non-cash gain of $0.09 upon the adoption of SFAS No. 133 effective January 1, 2001. As previously disclosed, the company remains committed to selling its Wisvest Connecticut assets.

Share repurchase

In September 2000, WEC announced that the Board of Directors had authorized an increase in the share repurchase program to $400 million from $200 million. During 2001, the company purchased 5.9 million shares for $134 million. Since the inception of the repurchase program a total of $234 million of WEC stock, or 10.9 million shares have been acquired.

Through Wisconsin Energy’s Stock Plus Investment Plan, which allows investors to reinvest their dividends and purchase additional shares, and other 401K and stock option plans, approximately 3.9 million new shares were issued since inception of the repurchase program.

WEC achieved initial regulatory objectives for its Power the Future plan when the company received a limited Declaratory Ruling from the Public Service Commission of Wisconsin in October, 2001. The ruling allowed for advance planning of the electric generation building portion of the plan. Also in October, WEC created W.E. Power, LLC, to design, build and own the new electric generation that is part of the Power the Future plan.

On February 1, 2002, the company filed the required applications with the Public Service Commission of Wisconsin for permission to begin construction of 2,800 megawatts of new generation in the state. WEC anticipates that the review and approval process will be completed by the end of 2002, allowing construction of the first combined cycle gas turbine unit to begin in early 2003.

Wisconsin Energy confirms its previously announced range for 2002. Wisconsin Energy believes that it can achieve earnings per share in the $2.20 to $2.40 range. Amongst other factors, this forecast assumes normal weather, appropriate recovery of fuel costs and the continuation of the share repurchase program.

Visit the company’s Web site at www.WisconsinEnergy.com

Previous articleWestinghouse Process Control selected to install information & control system at two Mexican sites
Next articleWestcoast Energy announces record net income

No posts to display