EX-99.3 3 0003.txt WEC UNAUDITED PRO FORMA FINANCIAL INFORMATION
Exhibit 99.3 WISCONSIN ENERGY CORPORATION UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT REFLECTING COMPLETION OF THE MERGER WITH WICOR, INC. Twelve Months Ended December 31, 1999 Wisconsin Pro Forma Pro Forma Energy WICOR Adjustments Combined ----------- --------- -------------- ------------ (In Thousands, Except Per Share Amounts) Operating Revenues $2,272,639 $1,010,113 $ - $3,282,752 Operating Expenses Fuel 352,979 - - 352,979 Purchased power 235,101 - - 235,101 Cost of gas sold 174,046 297,222 - 471,268 Cost of goods sold - 357,704 - 357,704 Other operation and maintenance 708,758 204,290 607 (b) 3,290 (a) 916,945 Depreciation and amortization 270,484 37,091 18,322 (c) 6,622 (d) 332,519 Property and revenue tax 74,877 7,852 (3,290) (a) 79,439 ---------- -------- -------- ---------- Operating Income 456,394 105,954 (25,551) 536,797 Other Income and Deductions 14,215 (1,589) - 12,626 Interest Charges and Other (150,473) (16,555) (74,995) (e) (242,023) ---------- -------- -------- ---------- Income Before Income Taxes 320,136 87,810 (100,546) 307,400 Provision (Benefit) for Income Taxes 111,147 33,977 (33,712) (f) 111,412 ---------- -------- -------- ---------- Net Income $208,989 $53,833 ($66,834) $195,988 ========== ======== ======== ========== Earnings Per Share Basic $1.79 $1.67 Diluted $1.79 $1.65 Weighted Average Shares Common shares outstanding 117,019 58 (h) 117,077 Diluted shares outstanding 117,019 1,527 (h) 118,546 See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Information.
WISCONSIN ENERGY CORPORATION UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT REFLECTING COMPLETION OF THE MERGER WITH WICOR, INC. Three Months Ended March 31, 2000 Wisconsin Pro Forma Pro Forma Energy WICOR Adjustments Combined ----------- --------- -------------- ------------ (In Thousands, Except Per Share Amounts) Operating Revenues $627,750 $339,241 $ - $966,991 Operating Expenses Fuel 94,553 - - 94,553 Purchased power 65,779 - - 65,779 Cost of gas sold 69,292 120,745 - 190,037 Cost of goods sold - 100,374 - 100,374 Other operation and maintenance 185,140 57,938 152 (b) 1,130 (a) 244,360 Depreciation and amortization 103,660 9,676 4,581 (c) 1,655 (d) 119,572 Property and revenue tax 20,727 2,338 (1,130) (a) 21,935 -------- -------- -------- --------- Operating Income 88,599 48,170 (6,388) 130,381 Other Income and Deductions 37,392 (861) - 36,531 Interest Charges and Other (43,170) (5,139) (18,749) (e) (67,058) -------- -------- -------- --------- Income Before Income Taxes 82,821 42,170 (25,137) 99,854 Provision (Benefit) for Income Taxes 32,227 16,182 (8,428) (f) 39,981 -------- -------- -------- --------- Net Income $50,594 $25,988 ($16,709) $59,873 ======== ======== ======== ========= Earnings Per Share Basic $0.42 $0.50 Diluted $0.42 $0.50 Weighted Average Shares Common shares outstanding 119,512 58 (h) 119,570 Diluted shares outstanding 119,512 587 (h) 120,099 See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Information.
WISCONSIN ENERGY CORPPORATION UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET REFLECTING COMPLETION OF THE MERGER WITH WICOR, INC. March 31, 2000 Wisconsin Pro Forma Pro Forma Energy WICOR Adjustments Combined ----------- --------- -------------- ------------ (In Thousands) Assets ------ Property, Plant & Equipment $3,889,712 $459,560 $35,444 (g) $4,384,716 Investments 969,921 - 8,266 (a) 978,187 Current Assets Cash & cash equivalents 24,746 7,738 - 32,484 Accounts receivable-net, including accrued utility revenues 366,165 243,729 - 609,894 Materials, supplies and inventory 196,051 103,853 15,555 (g) 6,748 (a) 322,207 Prepayments and other current assets 99,487 34,235 (5,919) (g) (6,748) (a) 121,055 ---------- ---------- --------- ---------- Total Current Assets 686,449 389,555 9,636 1,085,640 ---------- ---------- --------- ---------- Deferred Charges and Other Assets Goodwill 57,386 96,783 732,889 (g) 887,058 Regulatory assets 204,562 50,724 - 255,286 Accumulated deferred income taxes 199,832 - - 199,832 Other assets, including prepaid pension costs 190,154 96,645 185,988 (g) (8,266) (a) 464,521 ---------- ---------- --------- ---------- Total Deferred Charges and Other Assets 651,934 244,152 910,611 1,806,697 ---------- ---------- --------- ---------- Total Assets $6,198,016 $1,093,267 $963,957 $8,255,240 ========== ========== ========= ========== Capitalization and Liabilities ------------------------------ Capitalization Common stock equity $2,034,985 $449,871 ($411,856) (g) $2,073,000 Preferred stock 30,450 - - 30,450 Wisconsin Energy-obligated redeemable preferred securities of subsidiary trust 200,000 - - 200,000 Long-term debt 2,135,505 213,234 (13,538) (g) 2,335,201 ---------- ---------- --------- ---------- Total Capitalization 4,400,940 663,105 (425,394) 4,638,651 ---------- ---------- --------- ---------- Current Liabilities Short-term debt, including long-term debt due currently 439,624 72,203 1,195,004 (h) 1,706,831 Accounts payable 191,196 88,172 - 279,368 Accrued liabilities and other 200,390 107,141 16,105 (g) 323,636 ---------- ---------- --------- ---------- Total Current Liabilities 831,210 267,516 1,211,109 2,309,835 ---------- ---------- --------- ---------- Deferred Credits and Other Liabilities Accumulated deferred income taxes 624,325 55,931 48,625 (g) 728,881 Regulatory liabilities 123,160 25,747 181,557 (g) 330,464 Other, including postretirement benefit obligation 218,381 80,968 (51,940) (g) 247,409 ---------- ---------- --------- ---------- Total Deferred Credits and Other Liabilities 965,866 162,646 178,242 1,306,754 ---------- ---------- --------- ---------- Total Capitalization and Liabilities $6,198,016 $1,093,267 $963,957 $8,255,240 ========== ========== ========= ========== See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Information.
WISCONSIN ENERGY CORPORATION NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION (In Thousands) This unaudited pro forma financial information gives effect to the acquisition of WICOR, Inc. by Wisconsin Energy Corporation on April 26, 2000, accounted for as a purchase transaction under Accounting Principles Board Opinion No. 16, Business Combinations. The pro forma information does not reflect anticipated recurring savings arising from integrating the operations of the two companies nor any costs to achieve such savings. Wisconsin Energy's Unaudited Pro Forma Combined Condensed Financial Information assumes that the WICOR acquisition occurred (1) as of January 1, 1999, for purposes of the Unaudited Pro Forma Combined Condensed Income Statements and (2) on March 31, 2000 for purposes of the Unaudited Pro Forma Combined Condensed Balance Sheet. a. Reclassification of amounts to conform the companies' historical presentation. b. Based upon revised actuarial information, WICOR's annual pension income will decrease by $0.4 million and annual post retirement benefit expense will increase by an additional $0.2 million (Net increase in expense of $0.6 million per year or $0.2 million per quarter). c. Amortization of goodwill over 40 years ($732.9 million/40 years = $18.3 million per year or $4.6 million per quarter). d. Additional depreciation and amortization resulting from the increased fair value of property, plant, and equipment and intangible assets acquired based upon various estimated useful lives ($6.6 million per year or $1.7 million per quarter). e. Incremental interest expense based upon an assumed rate of 6.1% ($1.2 billion x 6.1% = $72.9 million per year or $18.2 million per quarter). A 1/8 percent change in the interest rate would increase or decrease annual interest expense by approximately $1.5 million. Related debt issue of $2.7 million will be amortized over three years ($2.1 million for the first year and $0.3 million for the remaining two years). Wisconsin Energy initially funded the acquisition of WICOR through issuance of $1.2 billion of commercial paper with a weighted average effective interest rate of 6.1%. 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. Wisconsin Energy may refinance all or a portion of the $1.2 billion of short- term debt with medium or long-term debt. Any refinancing of the short-term debt issued to acquire WICOR is not included in this pro forma financial information. f. Reduction of income taxes relating to the foregoing adjustments. g. Adjustments to WICOR's assets acquired and liabilities assumed to reflect fair value, purchase accounting adjustments and related tax effects. The preliminary purchase price allocation, including the excess of the purchase price over the fair value of net assets acquired at the date of acquisition, is as follows: Purchase price $1,242,343 Historical net book value of assets acquired 462,646 ---------- Excess of purchase price over net book value of assets acquired 779,697 Allocated to: Inventories (15,555) Property, plant and equipment (35,444) Intangible assets (63,093) Prepaid pension asset (136,360) Postretirement benefit obligation (60,788) Regulatory liabilities 181,557 Deferred tax liabilities 54,544 Long-term debt (13,538) Other current and noncurrent assets and liabilities 41,869 ---------- Remaining excess of cost over fair value of net assets acquired (goodwill) $732,889 ==========
Some of the foregoing purchase price allocations, which are currently being finalized and may be revised at a later date, are based upon preliminary studies and valuations of the fair value of the acquired assets and assumed liabilities. Management does not believe that the final purchase price allocations will produce materially different results than those reflected herein. h. Purchase price was financed with 100% debt. In addition, WICOR's equity- based compensation awards outstanding at the effective time of the merger were converted into 57,745 shares of restricted Wisconsin Energy common stock ($1.2 million), into options for up to 4,571,345 shares of Wisconsin Energy common stock ($35.9 million) with a weighted average exercise price of $13.70 per share, and into deferred stock units payable in 105,520 shares of Wisconsin Energy common stock. The purchase price also included $10.2 million of transaction costs.