Wisconsin Energy Corporation Posts Higher 2004 Year-End Results

MILWAUKEE, Feb. 10 /PRNewswire-FirstCall/ -- Wisconsin Energy today reported 2004 net income of $306 million or $2.57 per share. This compares with earnings of $244 million or $2.06 per share in 2003.

In 2004, the company recorded a gain of $1.28 per share on the sale of its pump and water systems business offset somewhat by non-cash charges of 81 cents per share associated with the company's Calumet and Minergy Neenah facilities, debt redemption costs of 13 cents per share and severance costs of 16 cents per share. In 2003, our earnings were reduced by valuation charges of 32 cents per share offset by a gain of 7 cents per share on the sale of nonutility investments.

Excluding the effect of asset sales, impairment charges and other one-time items, adjusted earnings for 2004 were $285 million or $2.39 per share, compared with $274 million or $2.31 per share, on the same basis in 2003.

Wisconsin Energy also reported fourth quarter 2004 earnings of $93 million or $0.79 per share, compared with $72 million or $0.60 per share for the final quarter of 2003.

Results were higher in the fourth quarter of 2004 because of customer growth, slightly colder weather and the absence of a nuclear refueling outage.

Fourth quarter revenues were $952 million in 2004, compared with $852 million in the same period a year earlier. Annual revenues were $3.43 billion in 2004, compared with $3.31 billion in 2003.

Electricity sales were up approximately 1.5 percent in 2004, despite one of the coolest summers on record. Use of electricity by large commercial and industrial customers grew by 2.5 percent. Wisconsin Energy customers also set a new winter peak demand record on December 22, 2004.

"I am very pleased with our progress in 2004," said Gale Klappa, Wisconsin Energy's chairman, president and chief executive officer. "We successfully sold non-core assets, strengthened our balance sheet and improved our operating and financial performance. We also made significant progress on our Power the Future plan. Construction of the first of two 545 megawatt generating units at our Port Washington site was more than 75 percent complete at year end."

Earnings per share listed in this news release are on a fully diluted basis.

Conference Call

A conference call is scheduled for 1 p.m. Central Time on Thursday, February 10, 2005. The presentation will review 2004 year-end earnings and discuss the company's outlook for the future.

All interested parties, including stockholders, the news media and the general public, are invited to listen to the presentation. The conference call may be accessed by dialing (800) 811-8824 up to 15 minutes before the call begins. There is no pass code required. Access also may be gained through the company's Web site ( http://www.wisconsinenergy.com/ ) by clicking on the icon for the "Year-end Earnings Release and Conference Call." In conjunction with this earnings announcement, Wisconsin Energy has posted on its Web site detailed financial information on its fourth quarter and 2004 year-end performance. The materials will be available at 7:30 a.m. Central Time on February 10. An archive of the presentation will be available on the Web site after the call. A replay of the audio presentation will be available for one week after the call. Dial (888) 203-1112. The pass code is 180749.

Non-GAAP Earnings Measures

Adjusted earnings (non-GAAP earnings), which generally exclude non-operational items as well as one-time charges or credits that are not associated with the company's ongoing operations, are provided as a complement to earnings presented in accordance with GAAP. These items are not indicative of the company's operating performance. Therefore, we believe that the presentation of earnings from adjusted operations is relevant and useful to investors to understand Wisconsin Energy's operating performance. Management uses such measures internally to evaluate the company's performance and manage its operations.

Wisconsin Energy Corporation , based in Milwaukee, is a Fortune 500 energy company serving more than one million electric customers in Wisconsin and Michigan's Upper Peninsula and more than one million natural gas customers in Wisconsin. The company's principal utilities are We Energies and Edison Sault Electric. The company's nonutility businesses include energy development, recycling and renewable energy, and real estate development.

One of the Midwest's premier energy companies, Wisconsin Energy Corporation ( http://www.wisconsinenergy.com/ ) has approximately 5,600 employees, 58,000 stockholders and more than $9 billion of assets.

Forward-looking statements

Some matters discussed above are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements are subject to various risks and uncertainties. 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 particular, in the company's service territories; availability of the company's generating facilities; changes in purchased power costs; changes in coal or natural gas prices and supply availability and the ability to recover fuel and purchased power costs; varying weather conditions; risks associated with nonutility diversification; regulatory decisions; construction risks; obtaining necessary regulatory approvals and investment capital to implement the growth strategy; legal challenges to our Power the Future program; equity and bond market fluctuations; foreign, governmental, economic, political and currency risks; and other cautionary factors described in the Management's Discussion and Analysis of Financial Condition and Results of Operations in Wisconsin Energy Corporation's 10-K for the year ended December 31, 2003, and other factors described in the company's subsequent reports filed with the Securities and Exchange Commission.

Tables Follow WISCONSIN ENERGY CORPORATION CONSOLIDATED CONDENSED INCOME STATEMENTS (Unaudited) Twelve Months Three Months Ended Ended December 31 December 31 2004 2003 2004 2003 (Millions of Dollars, Except Per Share Amounts) Operating Revenues $3,431 $3,308 $952 $852 Operating Expenses Fuel and purchased power 593 571 135 132 Cost of gas sold 891 863 295 240 Other operation and maintenance 1,003 934 243 231 Depreciation, decommissioning and amortization 327 330 82 82 Property and revenue taxes 87 82 22 19 Asset valuation charges, net 150 46 1 9 Total Operating Expenses 3,051 2,826 778 713 Operating Income 380 482 174 139 Other Income, Net 16 42 4 12 Interest Expense 194 214 42 54 Income From Continuing Operations Before Income Taxes 202 310 136 97 Income Taxes 80 110 51 35 Income From Continuing Operations 122 200 85 62 Income From Discontinued Operations, Net of Tax 184 44 8 10 Net Income $306 $244 $93 $72 Earnings Per Share (Basic) Continuing operations $1.04 $1.71 $0.73 $0.52 Discontinued operations $1.56 $0.38 $0.06 $0.09 Total Earnings Per Share (Basic) $2.60 $2.09 $0.79 $0.61 Earnings Per Share (Diluted) Continuing operations $1.03 $1.69 $0.73 $0.51 Discontinued operations $1.54 $0.37 $0.06 $0.09 Total Earnings Per Share (Diluted) $2.57 $2.06 $0.79 $0.60 Weighted Average Common Shares Outstanding (Millions) Basic 117.7 117.1 117.0 118.1 Diluted 119.1 118.4 118.2 120.0 Dividends Per Share of Common Stock $0.83 $0.80 $0.21 $0.20 WISCONSIN ENERGY CORPORATION SUMMARY OF CONSOLIDATED CONDENSED EARNINGS (Unaudited) Twelve Months Three Months Ended Ended December 31 December 31 2004 2003 2004 2003 (Millions of Dollars) Operating Income Utility Energy Segment $529 $544 $166 $155 Non-Utility Energy Segment (120) (62) 7 (12) Corporate and Other (29) - 1 (4) Total Operating Income 380 482 174 139 Other Income, Net 16 42 4 12 Interest Expense 194 214 42 54 Income From Continuing Operations Before Income Taxes 202 310 136 97 Income Taxes 80 110 51 35 Income From Continuing Operations 122 200 85 62 Income From Discontinued Operations, Net of Tax 184 44 8 10 Net Income $306 $244 $93 $72 WISCONSIN ENERGY CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited) December 31 2004 2003 (Millions of Dollars) Assets Property, Plant and Equipment In Service $8,238 $8,342 Accumulated depreciation (3,121) (3,021) 5,117 5,321 Construction work in progress 602 296 Leased facilities, net 99 105 Nuclear fuel, net 85 78 Net Property, Plant and Equipment 5,903 5,800 Investments 1,025 951 Current Assets Cash and cash equivalents 36 28 Accounts receivable 349 334 Accrued revenues 245 212 Materials, supplies and inventories 409 386 Other 137 168 Assets held for sale - 938 Total Current Assets 1,176 2,066 Deferred Charges and Other Assets Regulatory assets 850 612 Goodwill, net 442 442 Other 169 143 Total Deferred Charges and Other Assets 1,461 1,197 Total Assets $9,565 $10,014 Capitalization and Liabilities Capitalization Common equity $2,492 $2,359 Preferred stock of subsidiary 30 30 Long-term debt 3,240 3,571 Total Capitalization 5,762 5,960 Current Liabilities Long-term debt due currently 101 166 Short-term debt 338 591 Accounts payable 310 248 Accrued liabilities 114 126 Other 129 80 Liabilities held for sale - 252 Total Current Liabilities 992 1,463 Deferred Credits and Other Liabilities Regulatory liabilities 922 887 Asset retirement obligations 762 732 Deferred income taxes - long-term 531 571 Other 596 401 Total Deferred Credits and Other Liabilities 2,811 2,591 Total Capitalization and Liabilities $9,565 $10,014 WISCONSIN ENERGY CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) Twelve Months Ended December 31 2004 2003 (Millions of Dollars) Operating Activities Net income $306 $244 Income from discontinued operations, net of tax (184) (44) Reconciliation to cash Depreciation, decommissioning and amortization 360 360 Deferred income taxes and investment tax credits, net 6 65 Asset valuation charges, net 150 46 Working capital and other (39) (141) Cash Provided by Operating Activities 599 530 Investing Activities Capital expenditures (637) (649) Asset sales, net of acquisitions and investments 873 48 Other investing activities 7 5 Cash Provided by (Used in) Investing Activities 243 (596) Financing Activities Common stock issued (repurchased), net (82) 56 Dividends paid on common stock (98) (94) Change in debt, net (654) 121 Other - (24) Cash (Used in) Provided by Financing Activities (834) 59 Change in Cash From Continuing Operations 8 (7) Cash at Beginning of Period 28 35 Cash at End of Period $36 $28 Supplemental Information - Cash Paid For Interest (net of amount capitalized) $232 $221 Income taxes (net of refunds) $81 $92