SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission file number 33-64951
NEW CENTURY ENERGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 84-1334327
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1225 17th Street, Denver, Colorado 80202
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (303) 571-7511
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
As of May 13, 1997, 200 shares of the Registrant's Common Stock, $1 par
value (the only class of common stock), were issued and outstanding.
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TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements...................................... 1
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 5
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders....... 5
Item 5. Other Matters............................................. 5
Item 6. Exhibits and Reports on Form 8-K.......................... 5
Signature......................................................... 6
<PAGE>
PART I - FINANCIAL INFORMATION
Item l. Financial Statements
NEW CENTURY ENERGIES, INC.
BALANCE SHEETS
ASSETS
March 31, December 31,
1997 1996
---- ----
(Unaudited)
Receivable from shareholder (Note 2).................. $ 200 $ 200
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities........................................... $ - $ -
Shareholders' equity
Common Stock, $1.00 par value (Note 1):
260,000,000 shares authorized;
200 shares issued and outstanding................. 200 200
Preferred Stock, $1.00 par value:
20,000,000 shares authorized;
No shares issued or outstanding................... - -
------- --------
Total liabilities and shareholders' equity............ $ 200 $ 200
========= ==========
The accompanying notes are an integral part of these balance sheets.
1
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NEW CENTURY ENERGIES, INC.
NOTES TO FINANCIAL STATEMENT
(Unaudited)
1. Formation and Organization
New Century Energies, Inc. ("NCE" or "the Company") was incorporated under
the laws of the State of Delaware on August 21, 1995 with 50% of its outstanding
200 shares, $1.00 par value, common stock purchased by Public Service Company of
Colorado ("PSCo") and 50% purchased by Southwestern Public Service Company
("SPS").
In August, 1995, NCE, PSCo and SPS entered into an Agreement and Plan of
Reorganization (the "Merger Agreement") providing for a business combination as
peer firms involving PSCo and SPS in a "merger of equals" transaction (the
"Merger"). Under the terms of the Merger Agreement, PSCo and SPS will be the
surviving corporations and will become wholly-owned subsidiaries of NCE. Each
share of NCE common stock issued and outstanding immediately prior to the
effective time of the Merger will be canceled, and no consideration shall be
delivered in exchange for such stock. Each outstanding share of PSCo common
stock, par value $5.00 per share, will be canceled and converted into the right
to receive one share of NCE common stock and each outstanding share of SPS
common stock, $1.00 par value, will be canceled and converted into the right to
receive 0.95 of one share of NCE common stock. Based on the outstanding common
stock of PSCo and SPS at March 31, 1997, the Merger would result in the common
shareholders of PSCo owning 63% of the common equity of NCE and the common
shareholders of SPS owning 37% of the common equity of NCE.
NCE filed a registration statement on Form S-4 with the Securities and
Exchange Commission ("SEC") which became effective on December 13, 1995 with
respect to the shares of common stock of NCE issuable in the mergers discussed
above. On April 21, 1997, a second Form S-4 was filed to register 1.5 million
additional shares of common stock.
The Merger is subject to customary closing conditions, including the
receipt of all necessary shareholder approvals, governmental approvals and the
making of all necessary governmental filings, including approvals and findings
of state utility regulators in Colorado, Texas, New Mexico, Wyoming and Kansas,
as well as the approval of the Federal Energy Regulatory Commission, the Nuclear
Regulatory Commission, the Securities and Exchange Commission ("SEC"), the
Federal Trade Commission and the U.S. Department of Justice in addition to the
expiration or termination of the applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. All required
shareholder approvals and state and Federal regulatory agency authorizations
have been received, except for the approval by the SEC. The Company expects that
the SEC will make its ruling on the Merger in the second quarter of 1997 and the
Merger will be completed at such time.
NCE currently engages in no significant operations other than the
organization of the proposed public utility holding company. Descriptions of the
businesses of PSCo and SPS are contained in their reports under Section 13 or
15(d) of the Securities and Exchange Act of 1934 incorporated herein by
reference.
2. Related Party Transactions
PSCo and SPS have incurred all costs related to the formation of NCE,
including those costs associated with the registration of NCE's common stock and
its application to be a registered public utility holding company. Such costs,
approximately $0.2 million for the three months ended March 31, 1997
(approximately $3.7 million since inception), were not charged to NCE.
Accordingly, the Company has no operating or cash flow activities to report in
statements of income or statements of cash flows for the three month periods
ended March 31, 1997 and 1996.
The cash received from shareholders was deposited into a PSCo bank account
during the first quarter of 1996 and, accordingly, NCE has recognized this
amount as a receivable from shareholder in the accompanying balance sheets.
2
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3. Management's Representations
In the opinion of the Company, the accompanying balance sheets include all
adjustments necessary for the fair presentation of the financial position of NCE
at March 31, 1997 and December 31, 1996. As discussed in Note 2, all costs
related to the formation of NCE have been incurred by PSCo and SPS; therefore,
the Company has no operating or cash flow activities to report in a statement of
income or a statement of cash flows for the first quarter of 1997and 1996. The
financial information and notes thereto should be read in conjunction with the
financial information included in NCE's 1996 Annual Report filed with the SEC on
Form 10-K.
3
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO NEW CENTURY ENERGIES, INC.
We have reviewed the accompanying balance sheet of New Century Energies, Inc. (a
Delaware corporation) as of March 31, 1997. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet of New Century Energies, Inc. as of December 31,
1996 (not presented herein), and, in our report dated February 6, 1997, we
expressed an unqualified opinion on that statement. In our opinion, the
information set forth in the accompanying balance sheet as of December 31, 1996,
is fairly stated, in all material respects, in relation to the balance sheet
from which it has been derived.
ARTHUR ANDERSEN LLP
Denver, Colorado,
May 12, 1997
4
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
NCE engages in no significant operations other than the organization of
the proposed public utility holding company. See Note 1. Formation and
Organization and Note 2. Related Party Transactions in Item 1. Financial
Statements.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On April 29, 1997, the shareholders of NCE elected the following persons
as directors:
Wayne H. Brunetti A. Barry Hirshfeld
Coney C. Burgess J. Howard Mock
Danny H. Conklin Will F. Nicholson, Jr.
Giles M. Forbess J. Michael Powers
Gayle L. Greer Rodney E. Slifer
Bill D. Helton W. Thomas Stephens
R. R. Hemminghaus Robert G. Tointon
Subsequently, on May 1, 1997, the shareholders approved the New Century
Energies, Inc. Omnibus Incentive Plan which was previously adopted by the NCE
directors as noted below.
Item 5. Other Matters
On April 30, 1997, a Board of Directors meeting was held where the
following officers of NCE listed were approved and authorized to proceed with
organization and operation of NCE.
Chairman of the Board and Chief Executive Officer Bill D.Helton
Vice Chairman, President and Chief Operating Officer Wayne H.Brunetti
Executive Vice President and Treasurer Richard C. Kelly
Senior Vice President Patricia T. Smith
Secretary W. Wayne Brown
Assistant Secretary Carol J. Peterson
Assistant Secretary Mary Pullum
Assistant Treasurer James Steinhilper
Additionally, the Board of Directors approved various administrative and
organizational actions, including, among other things, the approval of an
executive compensation plan and a shareholder rights agreement, adoption of the
Omnibus Plan, a corporate seal, form of stock certificate and the appointment of
General Counsel and independent public accountants.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule UT
99 NCE Unaudited Pro Forma Combined Financial Information
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the first quarter of 1997.
5
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, New Century Energies, Inc. has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
NEW CENTURY ENERGIES, INC.
By /s/R. C. Kelly
---------------------------------
R. C. KELLY
Executive Vice President and Treasurer
Dated: May 13, 1997
6
<PAGE>
EXHIBIT 99
NCE UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited pro forma combined balance sheets at March 31,
1997 and December 31, 1996 give effect to the Merger as if it had occurred at
March 31, 1997 and December 31, 1996, respectively. The unaudited pro forma
combined statements of income for the three months ended March 31, 1997 and for
each of the three years ended December 31, 1996 give effect to the Merger as if
it had occurred on January 1, 1994. These statements are prepared on the basis
of accounting as required under a pooling of interests and do not reflect any
cost savings or other synergies anticipated by management as a result of the
Merger. Accordingly, the pro forma information is not necessarily indicative of
the financial position or results of operations that would have occurred had the
Merger been consummated for the periods for which it is given effect, nor is it
necessarily indicative of future operating results or financial condition.
NEW CENTURY ENERGIES, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
(Thousands of Dollars)
March 31, 1997
ASSETS
PSCo SPS Pro Forma
---- --- ---------
Property, plant and equipment, at cost:
Electric ............................... $4,012,454 $2,519,287 $6,531,741
Gas..................................... 1,067,579 - 1,067,579
Steam................................... 17,750 - 17,750
Other................................... 60,626 38,149 98,775
Common to all departments............... 429,123 - 429,123
Construction in progress................ 108,101 103,825 211,926
------- ------- -------
5,695,633 2,661,261 8,356,894
Less: accumulated depreciation ......... 2,079,254 956,944 3,036,198
--------- ------- ---------
Total property, plant and equipment... 3,616,379 1,704,317 5,320,696
--------- --------- ---------
Investments, at cost, and receivables...... 43,058 35,153 78,211
Current assets:
Cash and temporary cash investments..... 368,418 50,709 419,127
Accounts receivable - net............... 203,604 64,169 267,773
Accrued unbilled revenues............... 69,992 15,634 85,626
Recoverable purchased gas and electric
energy costs ........................ 63,365 11,456 74,821
Materials and supplies, at average cost. 47,419 18,149 65,568
Fuel inventory, at average cost......... 24,572 2,318 26,890
Gas in underground storage, at cost (LIFO) 19,954 - 19,954
Regulatory assets recoverable within one year 44,020 - 44,020
Prepaid expenses and other.............. 40,375 7,754 48,129
------ ----- ------
Total current assets................... 881,719 170,189 1,051,908
------- ------- ---------
Deferred charges:
Regulatory assets....................... 291,764 129,358 421,122
Unamortized debt expense ............... 11,908 9,814 21,722
Other................................... 68,152 41,421 109,573
------- ------- -------
Total deferred charges................. 371,824 180,593 552,417
------- ------- -------
$4,912,980 $2,090,252 $7,003,232
========== ========== ==========
The accompanying notes to unaudited pro forma combined financial
information are an integral part of this statement.
7
<PAGE>
NEW CENTURY ENERGIES, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
(Thousands of Dollars)
March 31, 1997
CAPITAL AND LIABILITIES
PSCo SPS Pro Forma
---- --- ---------
Common stock (2) .......................... $ 326,350 $ 40,918 $ 104,142
Paid in capital (2)........................ 739,522 307,484 1,310,132
Retained earnings (5)...................... 415,513 379,062 787,122
------- ------- -------
Total common equity.................... 1,481,385 727,464 2,201,396
Preferred stock:
Not subject to mandatory redemption..... 140,008 - 140,008
Subject to mandatory redemption at par.. 39,913 - 39,913
Company obligated mandatorily redeemable
preferred securities of subsidiary trust - 100,000 100,000
Long-term debt............................. 1,482,816 620,597 2,103,413
--------- ------- ---------
3,144,122 1,448,061 4,584,730
Noncurrent liabilities:
Employees' postretirement benefits other
than pensions ....................... 55,940 3,158 59,098
Employees' postemployment benefits...... 25,182 1,340 26,522
------- ------- -------
Total noncurrent liabilities........... 81,122 4,498 85,620
------- ------- -------
Current liabilities:
Notes payable and commercial paper...... 295,400 119,586 414,986
Long-term debt due within one year...... 255,076 229 255,305
Preferred stock subject to mandatory
redemption within one year ........... 2,576 - 2,576
Accounts payable........................ 154,394 76,758 231,152
Dividends payable....................... 37,210 - 37,210
Customers' deposits..................... 22,286 5,761 28,047
Accrued taxes........................... 85,675 13,948 99,623
Accrued interest........................ 27,885 9,672 37,557
Defueling and decommissioning liability. 7,913 - 7,913
Current portion of accumulated deferred
income taxes ......................... 21,280 (3,568) 17,712
Merger costs (5)........................ - - 7,453
Other................................... 53,935 29,162 83,097
------- ------- -------
Total current liabilities.............. 963,630 251,548 1,222,631
------- ------- ---------
Deferred credits:
Customers' advances for construction ... 47,013 412 47,425
Unamortized investment tax credits ..... 104,676 5,657 110,333
Accumulated deferred income taxes....... 542,372 369,304 911,676
Other................................... 30,045 10,772 40,817
------- ------- -------
Total deferred credits................. 724,106 386,145 1,110,251
------- ------- ---------
$4,912,980 $2,090,252 $7,003,232
========== ========== ==========
The accompanying notes to unaudited pro forma combined financial
information are an integral part of this statement.
8
<PAGE>
NEW CENTURY ENERGIES, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
(Thousands of Dollars)
December 31, 1996
ASSETS
PSCo SPS Pro Forma
---- --- ---------
Property, plant and equipment, at cost:
Electric ............................... $3,931,413 $2,517,580 $6,448,993
Gas..................................... 1,035,394 - 1,035,394
Steam................................... 17,476 - 17,476
Other................................... 60,749 37,541 98,290
Common to all departments............... 418,262 - 418,262
Construction in progress................ 181,597 79,346 260,943
------- ------- -------
5,644,891 2,634,467 8,279,358
Less: accumulated depreciation ......... 2,045,996 944,279 2,990,275
--------- ------- ---------
Total property, plant and equipment... 3,598,895 1,690,188 5,289,083
--------- --------- ---------
Investments, at cost, and receivables...... 46,550 34,446 80,996
Current assets:
Cash and temporary cash investments..... 9,406 40,609 50,015
Accounts receivable - net............... 218,132 67,780 285,912
Accrued unbilled revenues............... 85,894 20,304 106,198
Recoverable purchased gas and electric
energy costs ......................... 31,288 15,715 47,003
Materials and supplies, at average cost. 48,972 17,776 66,748
Fuel inventory, at average cost......... 24,739 2,320 27,059
Gas in underground storage, at cost (LIFO) 42,826 - 42,826
Regulatory assets recoverable within one year 44,110 - 44,110
Prepaid expenses and other.............. 41,790 7,469 49,259
------- ------- -------
Total current assets................... 547,157 171,973 719,130
------- ------- -------
Deferred charges:
Regulatory assets....................... 304,456 107,834 412,290
Unamortized debt expense ............... 10,975 9,864 20,839
Other................................... 64,615 30,489 95,104
------- ------- -------
Total deferred charges................. 380,046 148,187 528,233
------- ------- -------
$4,572,648 $2,044,794 $6,617,442
The accompanying notes to unaudited pro forma combined financial
information are an integral part of this statement.
9
<PAGE>
NEW CENTURY ENERGIES, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
(Thousands of Dollars)
December 31, 1996
CAPITAL AND LIABILITIES
PSCo SPS Pro Forma
---- --- ---------
Common stock (2) .......................... $ 324,094 $ 40,918 $ 103,691
Paid in capital (2)........................ 724,353 307,484 1,293,158
Retained earnings (5)...................... 389,841 383,350 764,646
------- ------- -------
Total common equity.................... 1,438,288 731,752 2,161,495
Preferred stock:
Not subject to mandatory redemption..... 140,008 - 140,008
Subject to mandatory redemption at par.. 39,913 - 39,913
Company obligated mandatorily redeemable
preferred securities of subsidiary trust - 100,000 100,000
Long-term debt............................. 1,259,528 620,400 1,879,928
--------- ------- ---------
2,877,737 1,452,152 4,321,344
Noncurrent liabilities:
Employees' postretirement benefits other
than pensions ........................ 55,677 2,967 58,644
Employees' postemployment benefits...... 25,182 2,369 27,551
------ ------ ------
Total noncurrent liabilities........... 80,859 5,336 86,195
------ ----- ------
Current liabilities:
Notes payable and commercial paper...... 244,725 53,836 298,561
Long-term debt due within one year...... 155,030 15,231 170,261
Preferred stock subject to mandatory
redemption within one year ........... 2,576 - 2,576
Accounts payable........................ 254,256 63,004 317,260
Dividends payable....................... 36,973 - 36,973
Customers' deposits..................... 21,441 5,842 27,283
Accrued taxes........................... 58,990 19,999 78,989
Accrued interest........................ 33,797 13,151 46,948
Defueling and decommissioning liability. 8,665 - 8,665
Current portion of accumulated deferred
income taxes ......................... 4,560 3,583 8,143
Merger costs (5)........................ - - 8,545
Other................................... 69,203 28,503 97,706
------- ------- -------
Total current liabilities.............. 890,216 203,149 1,101,910
------- ------- ---------
Deferred credits:
Customers' advances for construction.... 50,269 366 50,635
Unamortized investment tax credits ..... 105,928 5,719 111,647
Accumulated deferred income taxes....... 539,082 367,272 906,354
Other................................... 28,557 10,800 39,357
------- ------- -------
Total deferred credits................. 723,836 384,157 1,107,993
------- ------- ---------
$4,572,648 $2,044,794 $6,617,442
========== ========== ==========
The accompanying notes to unaudited pro forma combined financial
information are an integral part of this statement.
10
<PAGE>
NEW CENTURY ENERGIES, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
(Thousands of Dollars, Except per Share Data)
For the three months ended March 31, 1997
PSCo SPS Pro Forma
---- --- ---------
Operating revenues:
Electric................................ $ 373,953 $ 214,495 $ 588,448
Gas..................................... 291,825 - 291,825
Other................................... 11,882 6,800 18,682
------- ------- -------
677,660 221,295 898,955
Operating expenses:
Fuel used in generation................. 44,261 104,618 148,879
Purchased power......................... 122,626 5,207 127,833
Gas purchased for resale................ 207,352 - 207,352
Other operating expenses................ 82,828 30,020 112,848
Maintenance............................. 15,113 6,931 22,044
Depreciation and amortization........... 42,857 18,230 61,087
Taxes (other than income taxes) ........ 22,488 11,526 34,014
Income taxes............................ 35,317 10,292 45,609
------- ------- -------
572,842 186,824 759,666
------- ------- -------
Operating income........................... 104,818 34,471 139,289
Other income and deductions:
Allowance for equity funds used during
construction ......................... - 5 5
Miscellaneous income and deductions - net (889) (2,522) (3,411)
---- ------ -----
(889) (2,517) (3,406)
Interest charges:
Interest on long-term debt.............. 26,906 11,025 37,931
Amortization of debt discount and expense
less premium ......................... 928 562 1,490
Other interest.......................... 14,675 1,026 15,701
Allowance for borrowed funds used during
construction ......................... (1,461) (840) (2,301)
Dividend requirements on preferred stock
of subsidiaries ...................... - 1,963 4,906
---- ----- -----
41,048 13,736 57,727
------ ------ ------
Net income................................. 62,881 18,218 78,156
Dividend requirements on preferred stock... 2,943 - -
------- ------- -------
Earnings available for common stock........ $59,938 $18,218 $78,156
======= ======= =======
Weighted average common shares outstanding (2) 65,122 40,918 103,994
====== ======= =======
Earnings per weighted average share of
common stock outstanding ................ $0.92 $0.45 $0.75
===== ===== =====
The accompanying notes to unaudited pro forma combined financial
information are an integral part of this statement.
11
<PAGE>
NEW CENTURY ENERGIES, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
(Thousands of Dollars, Except per Share Data)
Year ended December 31, 1996
PSCo SPS Pro Forma
---- --- ---------
Operating revenues:
Electric................................ $1,488,990 $ 927,549 $2,416,539
Gas..................................... 640,497 - 640,497
Other................................... 41,899 32,047 73,946
------- ------- -------
2,171,386 959,596 3,130,982
Operating expenses:
Fuel used in generation................. 195,442 439,838 635,280
Purchased power......................... 490,428 20,154 510,582
Gas purchased for resale................ 393,163 - 393,163
Other operating expenses................ 336,100 133,657 469,757
Maintenance............................. 63,908 34,916 98,824
Depreciation and amortization........... 154,631 70,234 224,865
Taxes (other than income taxes) ........ 82,899 46,081 128,980
Income taxes............................ 96,331 57,322 153,653
------- ------- -------
1,812,902 802,202 2,615,104
--------- ------- ---------
Operating income........................... 358,484 157,394 515,878
Other income and deductions:
Allowance for equity funds used during
construction 757 179 936
Miscellaneous income and deductions - net (19,015) (10,202) (29,217)
------- ------- -------
(18,258) (10,023) (28,281)
Interest charges:
Interest on long-term debt.............. 92,205 46,096 138,301
Amortization of debt discount and expense
less premium ......................... 3,621 2,145 5,766
Other interest.......................... 57,398 6,241 63,639
Allowance for borrowed funds used during
construction (3,344) (2,601) (5,945)
Dividend requirements on preferred stock
of subsidiaries - 1,526 13,495
--- ----- ------
149,880 53,407 215,256
------- ------ -------
Net income................................. 190,346 93,964 272,341
Dividend requirements on preferred stock... 11,848 121 -
------- ------- -------
Earnings available for common stock........ $178,498 $93,843 $272,341
======== ======= ========
Weighted average common shares outstanding (2) 64,187 40,918 103,059
====== ====== =======
Earnings per weighted average share of common
stock outstanding ....................... $2.78 $2.29 $2.64
===== ===== =====
The accompanying notes to unaudited pro forma combined financial
information are an integral part of this statement.
12
<PAGE>
NEW CENTURY ENERGIES, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
(Thousands of Dollars, Except per Share Data)
Year ended December 31, 1995
PSCo SPS Pro Forma
---- --- ---------
Operating revenues:
Electric................................ $1,449,096 $ 852,510 $2,301,606
Gas..................................... 624,585 - 624,585
Other................................... 36,920 42,623 79,543
------- ------- -------
2,110,601 895,133 3,005,734
Operating expenses:
Fuel used in generation................. 181,995 376,544 558,539
Purchased power......................... 481,958 6,485 488,443
Gas purchased for resale................ 392,680 - 392,680
Other operating expenses(3)............. 346,025 137,892 483,917
Maintenance............................. 64,069 28,656 92,725
Depreciation and amortization........... 141,380 66,990 208,370
Taxes (other than income taxes) ........ 81,319 44,057 125,376
Income taxes............................ 95,357 69,840 165,197
------- ------- -------
1,784,783 730,464 2,515,247
--------- ------- ---------
Operating income........................... 325,818 164,669 490,487
Other income and deductions:
Allowance for equity funds used during
construction ......................... 3,782 245 4,027
Miscellaneous income and deductions - net (3) (6,838) 2,026 (4,812)
------ ----- ------
(3,056) 2,271 (785)
Interest charges:
Interest on long-term debt.............. 85,832 42,428 128,260
Amortization of debt discount and expense
less premium ......................... 3,278 2,047 5,325
Other interest.......................... 58,109 2,475 60,584
Allowance for borrowed funds used during
construction ......................... (3,313) (2,744) (6,057)
Dividend requirements on preferred stock
of subsidiaries ...................... - - 17,588
143,906 44,206 205,700
------- ------- -------
Net income................................. 178,856 122,734 284,002
Dividend requirements on preferred stock... 11,963 5,625 -
------- ------- -------
Earnings available for common stock........ $ 166,893 $ 117,109 $ 284,002
======== ======== ========
Weighted average common shares outstanding (2) 62,932 40,918 101,804
======= ======= =======
Earnings per weighted average share of
common stock outstanding ................ $2.65 $2.86 $2.79
===== ===== =====
The accompanying notes to unaudited pro forma combined financial
information are an integral part of this statement.
13
<PAGE>
NEW CENTURY ENERGIES, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
(Thousands of Dollars, Except per Share Data)
Year ended December 31, 1994
PSCo SPS Pro Forma
---- --- ---------
Operating revenues:
Electric................................ $1,399,836 $ 824,008 $2,223,844
Gas..................................... 624,922 - 624,922
Other................................... 32,626 39,028 71,654
------- ------- -------
2,057,384 863,036 2,920,420
Operating expenses:
Fuel used in generation................. 198,118 386,796 584,914
Purchased power......................... 437,087 4,401 441,488
Gas purchased for resale................ 397,877 - 397,877
Other operating expenses................ 369,094 140,221 509,315
Maintenance............................. 67,097 30,276 97,373
Defueling and decommissioning........... 43,376 - 43,376
Depreciation and amortization........... 139,035 60,232 199,267
Taxes (other than income taxes) ........ 86,408 42,993 129,401
Income taxes............................ 48,500 57,126 105,626
------- ------- -------
1,786,592 722,045 2,508,637
--------- ------- ---------
Operating income........................... 270,792 140,991 411,783
Other income and deductions:
Allowance for equity funds used during
construction ........................ 3,140 179 3,319
Gain on sale of WestGas Gathering, Inc. 34,485 - 34,485
Miscellaneous income and deductions - net (6,014) (2,695) (8,709)
------- ------ ------
31,611 (2,516) 29,095
Interest charges:
Interest on long-term debt.............. 89,005 37,720 126,725
Amortization of debt discount and expense
less premium ......................... 3,126 2,020 5,146
Other interest.......................... 44,021 2,406 46,427
Allowance for borrowed funds used during
construction ......................... (4,018) (1,303) (5,321)
Dividend requirements on preferred stock
of subsidiaries ...................... - - 16,892
--- --- ------
132,134 40,843 189,869
------- ------ -------
Net income................................. 170,269 97,632 251,009
Dividend requirements on preferred stock... 12,014 4,878 -
------- ----- ----
Earnings available for common stock........ $ 158,255 $ 92,754 $ 251,009
========== ========== =========
Weighted average common shares outstanding (2) 61,547 40,918 100,419
====== ====== =======
Earnings per weighted average share of
common stock outstanding ............. $2.57 $2.27 $2.50
===== ===== =====
The accompanying notes to unaudited pro forma combined financial
information are an integral part of this statement.
14
<PAGE>
NEW CENTURY ENERGIES, INC.
Notes to Unaudited Pro Forma Combined Financial Information
(1) The unaudited pro forma combined statements of income have been
prepared from the historical consolidated financial statements of PSCo and SPS
and are presented as if the companies were combined during all periods presented
herein. Certain items have been reclassified on the consolidated financial
statements of SPS to conform with the NCE presentation.
(2) The unaudited pro forma combined balance sheets and statements of
income reflect the conversion of each outstanding share of PSCo Common Stock
into one share of NCE Common Stock, and each outstanding share of SPS Common
Stock into 0.95 of one share of NCE Common Stock in accordance with the terms of
the Merger.
(3) There were no intercompany transactions and, accordingly, no pro forma
elimination adjustments were made.
(4) For a discussion regarding material commitments and contingencies
relating to PSCo and SPS, refer to their respective 1996 Annual Reports on Form
10-K and SPS's Form 10-Q for the quarters ended February 28, 1997 and November
30, 1996 and PSCo's Forms 8-K filed during the first quarter of 1997.
(5) The unaudited pro forma combined financial statements include
nonrecurring charges directly related to the Merger totaling approximately $1.0
million for the three months ended March 31, 1997 and approximately $9.4 million
and $6.8 million for the years ended December 31, 1996 and 1995, respectively.
These nonrecurring charges include merger transaction costs and benefits expense
resulting from an accelerated vesting of certain benefits. The unaudited pro
forma combined statements of income do not reflect future nonrecurring charges
directly related to the Merger. Those costs are estimated to total approximately
$7.5 million and $8.5 million at March 31, 1997 and at December 31, 1996,
respectively. The pro forma combined balance sheets at March 31, 1997 and
December 31, 1996 have been adjusted to include these items with the recognition
of additional current liabilities and the reduction of retained earnings.
15
<TABLE> <S> <C>
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM NEW CENTURY ENERGIES, INC. BALANCE SHEET AS
OF MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
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