filings.toolsItem 16. FORM 10-K SUMMARY
19K characters. Original on sec.gov ·
Item 16. FORM 10-K SUMMARY
None.
| 2018 Form 10-K | 147 | WEC Energy Group, Inc. |
SCHEDULE I – CONDENSED
PARENT COMPANY FINANCIAL STATEMENTS
WEC ENERGY GROUP, INC. (PARENT COMPANY ONLY)
A. INCOME STATEMENTS
| Year Ended December 31 | ||||||||||||
| (in millions) | 2018 | 2017 | 2016 | |||||||||
| Operating expenses | $ | 5.0 | $ | 6.0 | $ | 7.0 | ||||||
| Equity in earnings of subsidiaries | 1,108.3 | 1,234.7 | 996.5 | |||||||||
| Other income, net | 6.8 | 2.1 | 2.7 | |||||||||
| Interest expense | 104.1 | 82.0 | 90.0 | |||||||||
| Income before income taxes | 1,006.0 | 1,148.8 | 902.2 | |||||||||
| Income tax benefit | 53.3 | 54.9 | 36.8 | |||||||||
| Net income attributed to common shareholders | $ | 1,059.3 | $ | 1,203.7 | $ | 939.0 |
The accompanying Notes to Condensed Parent Company Financial Statements are an integral part of these financial statements.
| 2018 Form 10-K | 148 | WEC Energy Group, Inc. |
B. STATEMENTS OF COMPREHENSIVE INCOME
| Year Ended December 31 | ||||||||||||
| (in millions) | 2018 | 2017 | 2016 | |||||||||
| Net income attributed to common shareholders | $ | 1,059.3 | $ | 1,203.7 | $ | 939.0 | ||||||
| Other comprehensive (loss) income, net of tax | ||||||||||||
| Derivatives accounted for as cash flow hedges | ||||||||||||
| Net derivative losses, net of tax | (2.1 | ) | — | — | ||||||||
| Reclassification of net gains to net income, net of tax | (1.2 | ) | (1.3 | ) | (1.3 | ) | ||||||
| Cumulative effect adjustment from adoption of ASU 2018-02 | 1.6 | — | — | |||||||||
| Cash flow hedges, net | (1.7 | ) | (1.3 | ) | (1.3 | ) | ||||||
| Defined benefit plans | ||||||||||||
| Pension and OPEB costs arising during the period, net of tax | (0.9 | ) | (0.1 | ) | (1.0 | ) | ||||||
| Amortization of pension and OPEB costs included in net periodic benefit cost, net of tax | 0.2 | 0.2 | 0.3 | |||||||||
| Cumulative effect adjustment from adoption of ASU 2018-02 | (0.3 | ) | — | — | ||||||||
| Defined benefit plans, net | (1.0 | ) | 0.1 | (0.7 | ) | |||||||
| Other comprehensive (loss) income from subsidiaries, net of tax | (2.8 | ) | 1.2 | 0.3 | ||||||||
| Other comprehensive loss, net of tax | (5.5 | ) | — | (1.7 | ) | |||||||
| Comprehensive income attributed to common shareholders | $ | 1,053.8 | $ | 1,203.7 | $ | 937.3 |
The accompanying Notes to Condensed Parent Company Financial Statements are an integral part of these financial statements.
| 2018 Form 10-K | 149 | WEC Energy Group, Inc. |
C. BALANCE SHEETS
| At December 31 | ||||||||
| (in millions) | 2018 | 2017 | ||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 32.8 | $ | 4.0 | ||||
| Accounts receivable from related parties | 4.0 | 1.9 | ||||||
| Notes receivable from related parties | 71.0 | 64.1 | ||||||
| Prepaid taxes | — | 17.5 | ||||||
| Other | 0.6 | 0.6 | ||||||
| Current assets | 108.4 | 88.1 | ||||||
| Long-term assets | ||||||||
| Investments in subsidiaries | 12,682.5 | 12,101.9 | ||||||
| Notes receivable from UMERC | 150.0 | 50.0 | ||||||
| Other | 31.8 | 47.7 | ||||||
| Long-term assets | 12,864.3 | 12,199.6 | ||||||
| Total assets | $ | 12,972.7 | $ | 12,287.7 | ||||
| Liabilities and Equity | ||||||||
| Current liabilities | ||||||||
| Short-term debt | $ | 548.4 | $ | 494.8 | ||||
| Current portion of long-term debt | — | 300.0 | ||||||
| Accounts payable to related parties | 7.7 | 2.7 | ||||||
| Notes payable to related parties | 398.9 | 406.0 | ||||||
| Other | 14.0 | 8.9 | ||||||
| Current liabilities | 969.0 | 1,212.4 | ||||||
| Long-term liabilities | ||||||||
| Long-term debt | 2,190.8 | 1,592.3 | ||||||
| Other | 24.0 | 21.6 | ||||||
| Long-term liabilities | 2,214.8 | 1,613.9 | ||||||
| Common shareholders' equity | 9,788.9 | 9,461.4 | ||||||
| Total liabilities and equity | $ | 12,972.7 | $ | 12,287.7 |
The accompanying notes to Condensed Parent Company Financial Statements are an integral part of these financial statements.
| 2018 Form 10-K | 150 | WEC Energy Group, Inc. |
D. STATEMENTS OF CASH FLOWS
| Year Ended December 31 | ||||||||||||
| (in millions) | 2018 | 2017 | 2016 | |||||||||
| Operating activities | ||||||||||||
| Net income attributed to common shareholders | $ | 1,059.3 | $ | 1,203.7 | $ | 939.0 | ||||||
| Reconciliation to cash provided by operating activities | ||||||||||||
| Equity income in subsidiaries, net of distributions | (419.4 | ) | (686.1 | ) | (271.1 | ) | ||||||
| Deferred income taxes | 14.4 | 89.5 | 23.2 | |||||||||
| Change in – | ||||||||||||
| Prepaid taxes | 17.5 | 28.4 | (47.6 | ) | ||||||||
| Other current assets | (2.1 | ) | (0.1 | ) | 13.0 | |||||||
| Accrued taxes | 3.6 | — | (75.6 | ) | ||||||||
| Other current liabilities | 5.7 | (1.9 | ) | (5.6 | ) | |||||||
| Other, net | 5.6 | 0.9 | 6.3 | |||||||||
| Net cash provided by operating activities | 684.6 | 634.4 | 581.6 | |||||||||
| Investing activities | ||||||||||||
| Acquisition of Bluewater | — | (226.0 | ) | — | ||||||||
| Capital contributions to subsidiaries | (448.7 | ) | (173.4 | ) | (55.8 | ) | ||||||
| Return of capital from subsidiaries | 290.2 | — | 9.0 | |||||||||
| Short-term notes receivable from related parties, net | (6.9 | ) | 167.8 | 46.8 | ||||||||
| Issuance of long-term notes receivable from UMERC | (100.0 | ) | (50.0 | ) | — | |||||||
| Purchase of subsidiary's common stock | — | — | (66.4 | ) | ||||||||
| Other, net | 6.4 | 4.5 | (0.4 | ) | ||||||||
| Net cash used in investing activities | (259.0 | ) | (277.1 | ) | (66.8 | ) | ||||||
| Financing activities | ||||||||||||
| Exercise of stock options | 29.1 | 30.8 | 41.6 | |||||||||
| Purchase of common stock | (72.4 | ) | (71.3 | ) | (108.0 | ) | ||||||
| Dividends paid on common stock | (697.3 | ) | (656.5 | ) | (624.9 | ) | ||||||
| Issuance of long-term debt | 600.0 | — | — | |||||||||
| Retirement of long-term debt | (300.0 | ) | — | — | ||||||||
| Change in short-term debt | 53.6 | 173.0 | 13.9 | |||||||||
| Short-term notes payable to related parties, net | (6.2 | ) | 169.5 | 162.3 | ||||||||
| Other, net | (3.6 | ) | — | 0.2 | ||||||||
| Net cash used in financing activities | (396.8 | ) | (354.5 | ) | (514.9 | ) | ||||||
| Net change in cash and cash equivalents | 28.8 | 2.8 | (0.1 | ) | ||||||||
| Cash and cash equivalents at beginning of year | 4.0 | 1.2 | 1.3 | |||||||||
| Cash and cash equivalents at end of year | $ | 32.8 | $ | 4.0 | $ | 1.2 |
The accompanying Notes to Condensed Parent Company Financial Statements are an integral part of these financial statements.
| 2018 Form 10-K | 151 | WEC Energy Group, Inc. |
SCHEDULE I – CONDENSED
PARENT COMPANY FINANCIAL STATEMENTS
WEC ENERGY GROUP, INC. (PARENT COMPANY ONLY)
E. NOTES TO PARENT COMPANY FINANCIAL STATEMENTS
NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
For Parent Company only presentation, investments in subsidiaries are accounted for using the equity method. The condensed Parent Company financial statements and notes should be read in conjunction with the consolidated financial statements and notes of WEC Energy Group, Inc. appearing in this Annual Report on Form 10-K.
NOTE 2—CASH DIVIDENDS RECEIVED FROM SUBSIDIARIES
Dividends received from our subsidiaries during the years ended December 31 were as follows:
| (in millions) | 2018 | 2017 | 2016 | |||||||||
| WE | $ | 310.0 | $ | 240.0 | $ | 455.0 | ||||||
| We Power | 223.0 | 181.0 | 188.9 | |||||||||
| ATC Holding | 105.8 | 82.6 | 6.5 | |||||||||
| WG | 50.0 | 45.0 | 75.0 | |||||||||
| Wisvest | 0.1 | — | — | |||||||||
| Total | $ | 688.9 | $ | 548.6 | $ | 725.4 |
In accordance with ASU 2016-15, on January 1, 2018, we retrospectively adopted the cumulative earnings approach for classifying distributions received from equity method investments on our statements of cash flows. Due to our adoption of this approach, We Power distributions of $9.0 million were reclassified from operating activities to a return of capital within investing activities on our statement of cash flows for the year ended December 31, 2016. For more information on ASU 2016-15 and the cumulative earnings approach, see Note 23, Supplemental Cash Flow Information, of WEC Energy Group, Inc. in this Annual Report on Form 10-K.
NOTE 3—LONG-TERM DEBT
The following table shows the future maturities of our long-term debt outstanding as of December 31, 2018:
| (in millions) | ||||
| 2020 | $ | 400.0 | ||
| 2021 | 600.0 | |||
| Thereafter | 1,200.0 | |||
| Total | $ | 2,200.0 |
WECC is our subsidiary and has $50.0 million of long-term notes outstanding. In a Support Agreement between WECC and us, we agreed to make sufficient liquid asset contributions to WECC to permit WECC to service its debt obligations as they become due.
NOTE 4—FAIR VALUE MEASUREMENTS
The following table shows the financial instruments included on our balance sheets that are not recorded at fair value as of December 31:
| 2018 | 2017 | |||||||||||||||
| (in millions) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||
| Long-term notes receivable from UMERC | $ | 150.0 | $ | 145.5 | $ | 50.0 | $ | 49.5 | ||||||||
| Long-term debt, including current portion | 2,190.8 | 2,132.8 | 1,892.3 | 1,941.5 |
The fair values of our long-term notes receivable and long-term debt are categorized within Level 2 of the fair value hierarchy.
| 2018 Form 10-K | 152 | WEC Energy Group, Inc. |
NOTE 5—SUPPLEMENTAL CASH FLOW INFORMATION
| (in millions) | 2018 | 2017 | 2016 | |||||||||
| Cash (paid) for interest | $ | (102.9 | ) | $ | (82.5 | ) | $ | (89.6 | ) | |||
| Cash received (paid) for income taxes, net | 85.9 | 169.9 | (62.9 | ) | ||||||||
| Significant non-cash equity transactions | ||||||||||||
| Issuance of short-term note receivable to Bluewater | — | 115.0 | — | |||||||||
| Issuance of short-term note receivable to UMERC | — | 40.5 | — | |||||||||
| Settlement of short-term note payable with Bostco | — | 4.8 | — | |||||||||
| Settlement of short-term note payable with Wisvest | 0.9 | — | 40.0 |
NOTE 6—SHORT-TERM NOTES RECEIVABLE FROM RELATED PARTIES
The following table shows our outstanding short-term notes receivable from related parties as of December 31:
| (in millions) | 2018 | 2017 | ||||||
| UMERC | $ | 42.5 | $ | 38.1 | ||||
| Wispark | 28.5 | 26.0 | ||||||
| Total | $ | 71.0 | $ | 64.1 |
NOTE 7—SHORT-TERM NOTES PAYABLE TO RELATED PARTIES
The following table shows our outstanding short-term notes payable to related parties as of December 31:
| (in millions) | 2018 | 2017 | ||||||
| Integrys | $ | 139.5 | $ | 278.2 | ||||
| WBS | 123.5 | 16.4 | ||||||
| WECC | 110.3 | 110.2 | ||||||
| Bluewater Gas Storage | 25.6 | 0.3 | ||||||
| Wisvest | — | 0.9 | ||||||
| Total | $ | 398.9 | $ | 406.0 |
| 2018 Form 10-K | 153 | WEC Energy Group, Inc. |
SCHEDULE II
WEC ENERGY GROUP, INC.
VALUATION AND QUALIFYING ACCOUNTS
| Allowance for Doubtful Accounts (in millions) | Balance at Beginning of Period | Expense (1) | Deferral | Net Write-offs (2) | Balance at End of Period | |||||||||||||||
| December 31, 2018 | $ | 143.2 | $ | 94.7 | $ | (5.5 | ) | $ | (83.2 | ) | $ | 149.2 | ||||||||
| December 31, 2017 | 108.0 | 96.7 | 16.4 | (77.9 | ) | 143.2 | ||||||||||||||
| December 31, 2016 | 113.3 | 87.4 | (5.9 | ) | (86.8 | ) | 108.0 |
| (1) | Net of recoveries. |
| (2) | Represents amounts written off to the reserve, net of adjustments to regulatory assets. |
| 2018 Form 10-K | 154 | WEC Energy Group, Inc. |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| WEC ENERGY GROUP, INC. | ||
| By | /s/ J. KEVIN FLETCHER | |
| Date: | February 26, 2019 | J. Kevin Fletcher |
| Chief Executive Officer and President |
| 2018 Form 10-K | 155 | WEC Energy Group, Inc. |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| /s/ J. KEVIN FLETCHER | February 26, 2019 | |
| J. Kevin Fletcher, Chief Executive Officer and President and | ||
| Director -- Principal Executive Officer | ||
| /s/ SCOTT J. LAUBER | February 26, 2019 | |
| Scott J. Lauber, Senior Executive Vice President, Chief Financial Officer, and | ||
| Treasurer -- Principal Financial Officer | ||
| /s/ WILLIAM J. GUC | February 26, 2019 | |
| William J. Guc, Vice President and | ||
| Controller -- Principal Accounting Officer | ||
| /s/ GALE E. KLAPPA | February 26, 2019 | |
| Gale E. Klappa, Executive Chairman and Director | ||
| /s/ JOHN F. BERGSTROM | February 26, 2019 | |
| John F. Bergstrom, Director | ||
| /s/ BARBARA L. BOWLES | February 26, 2019 | |
| Barbara L. Bowles, Director | ||
| /s/ WILLIAM J. BRODSKY | February 26, 2019 | |
| William J. Brodsky, Director | ||
| /s/ ALBERT J. BUDNEY, JR. | February 26, 2019 | |
| Albert J. Budney, Jr., Director | ||
| /s/ PATRICIA W. CHADWICK | February 26, 2019 | |
| Patricia W. Chadwick, Director | ||
| /s/ CURT S. CULVER | February 26, 2019 | |
| Curt S. Culver, Director | ||
| /s/ DANNY L. CUNNINGHAM | February 26, 2019 | |
| Danny L. Cunningham, Director | ||
| /s/ WILLIAM M. FARROW, III | February 26, 2019 | |
| William M. Farrow, III, Director | ||
| /s/ THOMAS J. FISCHER | February 26, 2019 | |
| Thomas J. Fischer, Director | ||
| /s/ HENRY W. KNUEPPEL | February 26, 2019 | |
| Henry W. Knueppel, Director | ||
| /s/ ALLEN L. LEVERETT | February 26, 2019 | |
| Allen L. Leverett, Director | ||
| /s/ ULICE PAYNE, JR. | February 26, 2019 | |
| Ulice Payne, Jr., Director | ||
| /s/ MARY ELLEN STANEK | February 26, 2019 | |
| Mary Ellen Stanek, Director |
| 2018 Form 10-K | 156 | WEC Energy Group, Inc. |
Previous: Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES