Schedule I - Condensed Parent Company Financial Statements

12 Months Ended

Dec. 31, 2018

Condensed Financial Information Disclosure [Abstract]

SCHEDULE I - CONDENSED PARENT COMPANY FINANCIAL STATEMENTS

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.

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.

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.

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.

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.

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