UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-13-60
ANNUAL REPORT
FOR THE PERIOD
From Inception May 1, 1997 through December 31, 1997
TO THE
U.S. SECURITIES AND EXCHANGE COMMISSION
OF
NEW CENTURY SERVICES, INC.
(Exact Name of Reporting Company)
A Subsidiary SERVICE COMPANY
("Mutual" or "Subsidiary")
Date of Incorporation April 2, 1997
State or Sovereign Power under which Incorporated or Organized: Delaware
Location of Principal Executive Offices of Reporting Company: Denver, Colorado
Name, title, and address of officer to whom
correspondence concerning this report should be
addressed:
Teresa S. Madden Controller and Secretary 1225 17th Street Denver, CO
80202-5533
(Name) (Title) (Address)
Name of Principal Holding Company Whose Subsidiaries are served by
Reporting Company:
NEW CENTURY ENERGIES, INC.
<PAGE>
Page 1
INSTRUCTIONS FOR USE OF FORM U-13-60
1. Time of Filing. --Rule 94 provides that on or before the first day of May in
each calendar year, each mutual service company and each subsidiary service
company as to which the Commission shall have made a favorable finding pursuant
to Rule 88, and every service company whose application for approval or
declaration pursuant to Rule 88 is pending shall file with the Commission an
annual report on Form U-13-60 and in accordance with the Instructions for that
form.
2. Number of Copies. --Each annual report shall be filed in duplicate. The
company should prepare and retain at least one extra copy for itself in case
correspondence with reference to the report becomes necessary.
3. Period Covered by Report. --The first report filed by any company shall cover
the period from the date the Uniform System of Accounts was required to be made
effective as to that company under Rules 82 and 93 to the end of that calendar
year. Subsequent reports should cover a calendar year.
4. Report Format. --Reports shall be submitted on the forms prepared by the
Commission. If the space provided on any sheet of such form is inadequate,
additional sheets may be inserted of the same size as a sheet of the form or
folded to each size.
5. Money Amounts Displayed. --All money amounts required to be shown in
financial statements may be expressed in whole dollars, in thousands of dollars
or in hundred thousands of dollars, as appropriate and subject to provisions of
Regulation S-X (210.3-01(b)).
6. Deficits Displayed. --Deficits and other like entries shall be indicated by
the use of either brackets or a parenthesis with corresponding reference in
footnotes. (Regulation S-X,210.3-01(c))
7. Major Amendments or Corrections. --Any company desiring to amend or correct a
major omission or error in a report after it has been filed with the Commission
shall submit an amended report including only those pages, schedules, and
entries that are to be amended or corrected. A cover letter shall be submitted
requesting the Commission to incorporate the amended report changes and shall be
signed by a duly authorized officer of the company.
8. Definitions. --Definitions contained in Instruction 01-8 to the Uniform
System of Accounts for Mutual Service Companies and Subsidiary Service
Companies, Public Utility Holding Company Act of 1935, as amended February 2,
1979 shall be applicable to words or terms used specifically within this Form
U-13-60.
9. Organization Chart. --The service company shall submit with each annual
report a copy of its current organization chart.
10. Methods of Allocation. --The service company shall submit with each annual
report a listing of the currently effective methods of allocation being used by
the service company and on file with the Securities and Exchange Commission
pursuant to the Public Utility Holding Company Act of 1935.
11. Annual Statement of Compensation for Use of Capital Billed. --The service
company shall submit with each annual report a copy of the annual statement
supplied to each associate company in support of the amount of compensation for
use of capital billed during the calendar year.
<PAGE>
Page 2
LISTING OF SCHEDULES AND ANALYSIS OF ACCOUNTS
Schedule or Page
Description of Schedules and Accounts Account Number Number
- ------------------------------------- -------------- ------
Comparative Balance Sheet Schedule I 3-4
Service Company Property Schedule II 5
Accumulated Provision for Depreciation and
Amortization of Service Company Property Schedule III 6
Investments Schedule IV 7
Accounts Receivable from Associate Companies Schedule V 8
Fuel Stock Expenses Undistributed Schedule VI 9
Stores Expense Undistributed Schedule VII 9
Miscellaneous Current and Accrued Assets Schedule VIII 10
Miscellaneous Deferred Debits Schedule IX 10
Research, Development, or Demonstration Expenditures Schedule X 10
Proprietary Capital Schedule XI 11
Long-Term Debt Schedule XII 12
Current and Accrued Liabilities Schedule XIII 13
Notes to Financial Statements Schedule XIV 14-14e
Comparative Income Statement Schedule XV 15
Analysis of Billing - Associate Companies Account 457 16
Analysis of Billing - Nonassociate Companies Account 458 17
Analysis of Charges for Service - Associate and
Nonassociate Companies Schedule XVI 18
Schedule of Expense by Department or Service Function Schedule XVII 19-19c
Departmental Analysis of Salaries Account 920 20
Outside Services Employed Account 923 21-21a
Employee Pensions and Benefits Account 926 22
General Advertising Expenses Account 930.1 23
<PAGE>
Page 2a
Schedule or Page
Description of Schedules and Accounts Account Number Number
- ------------------------------------- -------------- ------
Miscellaneous General Expenses Account 930.2 23
Rents Account 931 23
Taxes Other Than Income Taxes Account 408 24
Donations Account 426.1 25
Other Deductions Account 426.5 26
Notes to Statement of Income Schedule XVIII 27
LISTING OF INSTRUCTIONAL FILING REQUIREMENTS
Organization Chart 28
Methods of Allocation 29-29b
Annual Statement of Compensation for Use of Capital Billed 30
Signature Clause 31
<PAGE>
Page 3
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
SCHEDULE I--COMPARATIVE BALANCE SHEET
(thousands of dollars)
Give balance sheet of the Company as of December 31 of the current and prior
year.
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
ACCOUNT ASSETS AND OTHER DEBITS 1997 1996
<S> <C> <C> <C> <C>
SERVICE COMPANY PROPERTY
101 Service company property (Schedule II) $ - $ -
107 Construction work in progress (Schedule II) 9 -
------ -------
Total Property 9 -
------ -------
108 Less accumulated provision for depreciation and
amortization of service company property (Schedule III) - -
------ -------
Net Service Company Property 9 -
------ -------
INVESTMENTS
123 Investments in associate companies (Schedule IV) - -
124 Other Investments (Schedule IV) - -
----- ------
Total Investments - -
----- ------
CURRENT AND ACCRUED ASSETS
131 Cash 3,868 -
134 Special deposits - -
135 Working funds 1 -
136 Temporary cash investments (Schedule IV) 6,725 -
141 Notes receivable - -
143 Accounts receivable 866 -
144 Accumulated provision for uncollectable accounts - -
146 Accounts receivable from associate companies (Schedule V) 145,046 -
152 Fuel stock expenses undistributed (Schedule VI) - -
154 Materials and supplies - -
163 Stores expense undistributed (Schedule VII) - -
165 Prepayments 9,875 -
174 Miscellaneous current and accrued assets (Schedule VIII) - -
----- ------
Total Current and Accrued Assets 166,381 -
------- ------
DEFERRED DEBITS
181 Unamortized debt expense - -
184 Clearing accounts 3,104 -
186 Miscellaneous deferred debits (Schedule IX) 500 -
188 Research, development, or demonstration expenditures (Schedule V) - -
190 Accumulated deferred income taxes - -
----- -----
Total Deferred Debits 3,604 -
----- -----
TOTAL ASSETS AND OTHER DEBITS $ 169,994 $ -
========= =======
</TABLE>
<PAGE>
Page 4
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
SCHEDULE I--COMPARATIVE BALANCE SHEET
(thousands of dollars)
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
ACCOUNT LIABILITIES AND PROPRIETARY CAPITAL 1997 1996
<S> <C> <C> <C> <C>
PROPRIETARY CAPITAL
201 Common stock issued (Schedule XI) $ - $ -
211 Miscellaneous paid-in-capital (Schedule XI) 1 -
215 Appropriated retained earnings (Schedule XI) - -
216 Unappropriated retained earnings (Schedule XI) - -
-------- --------
Total Proprietary Capital 1 -
-------- --------
LONG-TERM DEBT
223 Advances from associate companies (Schedule XII) - -
224 Other long-term debt (Schedule XII) - -
225 Unamortized premium on long-term debt - -
226 Unamortized discount on long-term debt-debit - -
-------- --------
Total Long-Term Debt - -
-------- --------
CURRENT AND ACCRUED LIABILITIES
231 Notes payable - -
232 Accounts payable 1,035 -
233 Notes payable to associate companies (Schedule XIII) 45,950 -
234 Accounts payable to associate companies (Schedule XIII) 113,537 -
236 Taxes accrued (1,907) -
237 Interest accrued - -
238 Dividends declared - -
241 Tax collections payable (4,350) -
242 Miscellaneous current and accrued liabilities (Schedule XIII) 9,788 -
-------- --------
Total Current and Accrued Liabilities 164,053 -
-------- --------
DEFERRED CREDITS
253 Other deferred credits 4,052 -
255 Accumulated deferred investment tax credits - -
-------- --------
Total Deferred Credits 4,052 -
-------- --------
282 ACCUMULATED DEFERRED INCOME TAXES 1,888 -
-------- --------
TOTAL LIABILITIES AND PROPRIETARY CAPITAL $169,994 $ -
======== ========
</TABLE>
<PAGE>
Page 5
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
For the Period Ended December 31, 1997
SCHEDULE II--SERVICE COMPANY PROPERTY
(thousands of dollars)
<TABLE>
<CAPTION>
BALANCE AT RETIREMENTS OTHER BALANCE
BEGINNING OR CHANGES AT CLOSE
DESCRIPTION OF YEAR ADDITIONS SALES (1) OF YEAR
----------- ------- --------- ----- --- -------
SERVICE COMPANY PROPERTY
<S> <C> <C> <C> <C> <C>
Account
301 Organization $ - $ - $ - $ - $ -
303 Miscellaneous intangible plant - - - - -
304 Land and land rights - - - - -
305 Structures and improvements - - - - -
306 Leasehold improvements - - - - -
307 Equipment (2) - - - - -
308 Office furniture and equipment - - - - -
309 Automobiles, other vehicles and - - - - -
related garage equipment - - - - -
310 Aircraft and airport equipment - - - - -
311 Other service company property (3) - - - - -
-------- --------- ---------- -------- --------
SUB-TOTAL - - - - -
107 Construction work in progress (4) - 9 - - 9
-------- --------- ---------- -------- --------
TOTAL $ - $ 9 $ - $ - $ 9
======== ========= ========== ======== ========
</TABLE>
(1) Provide an explanation of those changes considered material: None
(2) Subaccounts are required for each class of equipment owned. The service
company shall provide a listing by subaccount of equipment additions during
the year and the balance at the close of the year: None
(3) Describe other service company property: None
(4) Describe construction work in progress: Represents balance in the overhead
allocation pool for the Continuing Property Record (CPR) function.
<PAGE>
Page 6
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
For the Period Ended December 31, 1997
SCHEDULE III--ACCUMULATED PROVISION FOR DEPRECIATION
AND AMORTIZATION OF SERVICE COMPANY PROPERTY
(thousands of dollars)
<TABLE>
<CAPTION>
BALANCE AT ADDITIONS RETIREMENTS OTHER BALANCE
BEGINNING TO ACCOUNT OR CHANGES AT CLOSE
DESCRIPTION OF YEAR 403 SALES (1) OF YEAR
- ----------- ------- --- ----- --- -------
<S> <C> <C> <C> <C> <C>
Account
301 Organization $ - $ - $ - $ - $ -
303 Miscellaneous intangible plant - - - - -
304 Land and land rights - - - - -
305 Structures and improvements - - - - -
306 Leasehold improvements - - - - -
307 Equipment - - - - -
308 Office furniture and equipment - - - - -
309 Automobiles, other vehicles and
related garage equipment - - - - -
310 Aircraft and airport equipment - - - - -
311 Other service company property - - - - -
--------- ---------- ----------- -------- --------
TOTAL $ - $ - $ - $ - $ -
========= ========== =========== ======== ========
</TABLE>
(1) Provide an explanation of those changes considered material: None
<PAGE>
Page 7
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
For the Period Ended December 31, 1997
SCHEDULE IV--INVESTMENTS
(thousands of dollars)
INSTRUCTIONS: Complete the following schedule concerning investments.
Under Account 124, "Other Investments", state each investment separately, with
description, including the name of issuing company, number of shares or
principal amount, etc.
Under Account 135, "Temporary Cash Investments", list each investment
separately.
BALANCE AT BALANCE AT
BEGINNING CLOSE
ACCOUNT ASSETS AND OTHER DEBITS OF YEAR OF YEAR
- ------- ----------------------- ------- -------
123 Investment in associate companies $ - $ -
124 Other investments - -
136 Temporary cash investments
Federated Investors (money market) - 6,725
---------- ----------
TOTAL $ - $ 6,725
---------- ----------
TOTAL $ - $ 6,725
========== ==========
<PAGE>
Page 8
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
For the Period Ended December 31, 1997
SCHEDULE V--ACCOUNTS RECEIVABLE FROM ASSOCIATE COMPANIES
(thousands of dollars)
INSTRUCTIONS: Complete the following schedule listing accounts receivable from
each associate company. Where the service company has provided accommodation or
convenience payments for associate companies, a separate listing of total
payments for each associate company by subaccount should be provided.
BALANCE AT BALANCE AT
BEGINNING CLOSE
DESCRIPTION OF YEAR OF YEAR
----------- ------- -------
Account 146 -- Accounts Receivable from Associate Companies
New Century Energies, Inc. $ - $ 1,297
New Century Cadence, Inc. - 214
Cheyenne Light, Fuel and Power Company - 259
1480 Welton, Inc. - 20
Public Service Company of Colorado - 106,517
PSR Investments, Inc. - 19
e prime, inc. - 576
New Century International, Inc. - 222
Natural Fuels Corporation - 62
Fuel Resources Development Co., a
dissolved corporation - (4)
PS Colorado Credit Corporation - 42
WestGas InterState, Inc. - 5
Utility Engineering Corporation - 737
Quixx Corporation - 370
Southwestern Public Service Company - 34,710
--------- ---------
TOTAL $ - $ 145,046
========= =========
TOTAL
PAYMENTS
--------
Analysis of Convenience or Accommodation Payments:
None $ -
---------
TOTAL PAYMENTS $ -
=========
<PAGE>
Page 9
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
For the Period Ended December 31, 1997
SCHEDULE VI--FUEL STOCK EXPENSES UNDISTRIBUTED
(thousands of dollars)
INSTRUCTIONS: Report the amount of labor and expenses incurred with respect to
fuel stock expenses during the year and indicate amount attributable to each
associate company. Under the section headed "Summary" list below give an overall
report of the fuel functions performed by the service company.
DESCRIPTION LABOR EXPENSE TOTAL
----------- ------ ------- -----
Account 152--Fuel Stock Expenses Undistributed $ - $ - $ -
--------- --------- --------
TOTAL $ - $ - $ -
========= ========= ========
Summary: None
SCHEDULE VII--STORES EXPENSE UNDISTRIBUTED
INSTRUCTIONS: Report the amount of labor and expenses incurred with respect to
stores expenses during the year and indicate amount attributable to each
associate company.
DESCRIPTION LABOR EXPENSE TOTAL
----------- ----- ------- -----
Account 163 -- Stores Expenses Undistributed $ - $ - $ -
--------- --------- --------
TOTAL $ - $ - $ -
========= ========= ========
<PAGE>
Page 10
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
For the Period Ended December 31, 1997
SCHEDULE VIII--MISCELLANEOUS CURRENT AND ACCRUED ASSETS
(thousands of dollars)
INSTRUCTIONS: Provide detail of items in this account. Items less than $10,000
may be grouped, showing the number of items in each group.
BALANCE AT BALANCE AT
BEGINNING CLOSE
DESCRIPTION OF YEAR OF YEAR
----------- ------- --------
Account 174 --Miscellaneous Current and
Accrued Assets $ - $ -
---------- ---------
TOTAL $ - $ -
========== =========
SCHEDULE IX--MISCELLANEOUS DEFERRED DEBITS
(thousands of dollars)
INSTRUCTIONS: Provide detail of items in this account. Items less than $10,000
may be grouped by class showing the number of items in each class.
BALANCE AT BALANCE AT
BEGINNING CLOSE
DESCRIPTION OF YEAR OF YEAR
----------- ------- -------
Account 186 -- Miscellaneous Deferred Debits
Deposit for purchase of aircraft $ - $ 500
---------- ---------
TOTAL $ - $ 500
========== =========
SCHEDULE X--RESEARCH, DEVELOPMENT OR DEMONSTRATION EXPENDITURES
(thousands of dollars)
INSTRUCTIONS: Provide a description of each material research, development, or
demonstration project which incurred costs by the service corporation during the
year.
BALANCE AT BALANCE AT
BEGINNING CLOSE
DESCRIPTION OF YEAR OF YEAR
----------- ------- -------
Account 188 -- Research, Development, or Demonstration
Expenditures $ - $ -
--------- ---------
TOTAL $ - $ -
========= =========
<PAGE>
Page 11
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
For the Period Ended December 31, 1997
SCHEDULE XI--PROPRIETARY CAPITAL
(thousands of dollars, except per share data)
PAR OR OUTSTANDING AT
NUMBER OF STATED CLOSE OF PERIOD
ACCOUNT SHARES VALUE NUMBER TOTAL
NUMBER CLASS OF STOCK AUTHORIZED PER SHARE OF SHARES AMOUNT
- ------ -------------- ---------- --------- --------- ------
201 COMMON STOCK ISSUED 1,000 $0.01 1,000 $ -
INSTRUCTIONS: Classify amounts in each account with a brief explanation,
disclosing the general nature of transactions which give rise to the amounts.
DESCRIPTION AMOUNT
Account 211 -- Miscellaneous Paid-In Capital $ 1
Account 215 -- Appropriated Retained Earnings -
------
TOTAL $ 1
======
INSTRUCTIONS: Give particulars concerning net income or (loss) during the year,
distinguishing between compensation for the use of capital owned or net loss
remaining from servicing nonassociates per the General Instructions of the
Uniform System of Accounts. For dividends paid during the year in cash or
otherwise, provide rate percentage, amount of dividend, date declared and date
paid.
BALANCE AT BALANCE
BEGINNING NET INCOME DIVIDENDS AT CLOSE
DESCRIPTION OF YEAR OR (LOSS) PAID OF YEAR
- ----------- ------- --------- ---- -------
Account 216--Unappropriated
Retained Earnings $ - $ - $ - $ -
========== ========= ========= ========
TOTAL $ - $ - $ - $ -
========== ========= ========= ========
<PAGE>
Page 12
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
For the Period Ended December 31, 1997
SCHEDULE XII--LONG-TERM DEBT
(thousands of dollars)
INSTRUCTIONS: Advances from associate companies should be reported separately
for advances on notes and advances on open accounts. Names of associate
companies from which advances were received shall be shown under the class and
series of obligation column. For Account 224 - Other long-term debt provide the
name of creditor company or organization, terms of the obligation, date of
maturity, interest rate, and the amount authorized and outstanding.
<TABLE>
<CAPTION>
TERM OF OBLIGATION BALANCE AT
CLASS & SERIES DATE OF INTEREST AMOUNT BEGINNING
NAME OF CREDITOR OF OBLIGATION MATURITY RATE AUTHORIZED OF YEAR ADDITIONS
---------------- ------------- -------- ---- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Account 223 - Advances From
Associate Companies: $ - $ - $ -
Account 224 - Other Long-Term Debt: $ - $ - $ -
--------- --------- ---------
TOTAL $ - $ - $ -
========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
BALANCE
DEDUCTIONS AT CLOSE
NAME OF CREDITOR (1) OF YEAR
---------------- --- -------
<S> <C> <C>
Account 223 - Advances From
Associate Companies: $ - $ -
Account 224 - Other Long-Term Debt: $ - $ -
---------- ---------
TOTAL $ - $ -
========== =========
(1) Give an explanation of deductions: None
</TABLE>
<PAGE>
Page 13
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
For the Period Ended December 31, 1997
SCHEDULE XIII--CURRENT AND ACCRUED LIABILITIES
(thousands of dollars)
INSTRUCTIONS: Provide balance of notes and accounts payable to each associate
company. Give description and amount of miscellaneous current and accrued
liabilities. Items less than $10,000 may be grouped, showing the number of items
in each group.
BALANCE AT BALANCE AT
BEGINNING CLOSE
DESCRIPTION OF YEAR OF YEAR
----------- ------- -------
Account 233 -- Notes Payable to Associate Companies
Notes Payable - New Century Energies, Inc. $ - $ 45,950
--------- ---------
TOTAL $ - $ 45,950
========= =========
Account 234 -- Accounts Payable to Associate Companies
Accounts Payable - New Century Energies, Inc. $ - $ 126
Accounts Payable - New Century Cadence, Inc. - (7)
Accounts Payable - Public Service Company
of Colorado - 96,027
Accounts Payable - Southwestern Public Service
Company - 17,391
--------- ---------
TOTAL $ - $ 113,537
========= =========
Account 242 -- Miscellaneous Current and Accrued
Liabilities
Accrued Vacation Liability $ - $ 5,551
Accounts Payable Supplemental Executive
Retirement Plan - 652
Outstanding Payroll - 1,061
Current Liability - Outstanding Accounts
Payable checks (Norwest Bank at Grand - 2,524
Junction)
--------- ---------
TOTAL $ - $ 9,788
========= =========
<PAGE>
Page 14
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
For the Period Ended December 31, 1997
Schedule XIV - NOTES TO FINANCIAL STATEMENTS
INSTRUCTIONS: The space below is provided for important notes regarding the
financial statements or any account thereof. Furnish particulars as to any
significant contingent assets or liabilities existing at the end of the year.
Notes relating to financial statements shown elsewhere in this report may be
indicated here by reference.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Effective August 1, 1997, following the receipt of all required State and
Federal regulatory approvals, Public Service Company of Colorado (PSCo) and
Southwestern Public Service Company (SPS) merged in a tax-free "merger of
equals" transaction (the Merger) and became wholly-owned subsidiaries of New
Century Energies, Inc. (NCE). New Century Services (NCS or the Company), a
wholly-owned subsidiary of NCE, was incorporated in 1997 under the State of
Delaware. NCS is the service company for the NCE system and provides a variety
of administrative, management, engineering, construction, environmental and
support services. NCS provides its services to the NCE system generally at cost,
pursuant to service agreements approved by the Securities and Exchange
Commission (SEC) under the Public Utility Holding Company Act of 1935 (PUHCA).
The combining companies completed an employee downsizing in April 1997.
Effective May 1, 1997, with SEC approval, certain employees of PSCo and SPS were
transferred to NCS. Between May 1, 1997 and July 31, 1997, the Company was owned
50/50 by PSCo and SPS. On August 1, 1997, the Company was owned 100% by NCE.
This Annual Report on Form U-13-60 covers the period from inception (May 1,
1997) through December 31, 1997.
Regulation
NCS is subject to regulation by the SEC under the PUHCA. NCS' accounting
policies conform to generally accepted accounting principles. NCS maintains its
accounts in accordance with PUCHA, as administered by the SEC.
Management Estimates
The preparation of financial statements, in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Fair Value Disclosure
The carrying amount of financial instruments approximates fair value.
Statement of Financial Accounting Standards No. 107 (SFAS No 107), Disclosures
about Fair Value of Financial Instruments, defines the fair value of a financial
instrument as the amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced or liquidation sale.
The fair value estimates presented are based on pertinent information
available to management as of December 31, 1997. These fair value estimates have
not been comprehensively revalued for purposes of
<PAGE>
Page 14a
these financial statements since that date, and current estimates of fair value
may differ significantly from the amounts presented herein.
Income Taxes
The Company's operations are included in the consolidated Federal income
tax return of NCE. The allocation of income tax consequences to the Company,
including alternative minimum tax (AMT), is calculated under a parent company
policy which provides that benefits or liabilities created by the Company,
computed on a separate return basis, will be allocated to (and paid to or by)
the Company to the extent the benefits are usable or additional liabilities are
incurred in NCE's consolidated tax returns. Deferred taxes are provided on
temporary differences between the financial accounting and tax bases of assets
and liabilities using the tax rates which are in effect at the balance sheet
date (see Note 6).
Stock-based Compensation
The Company uses the intrinsic value based method of accounting for its
stock-based compensation plan.
2. COMMON STOCK
NCS is authorized to issue 1,000 shares of Common Stock at a par value of
one cent ($0.01) per share. During 1997, all shares of common stock were issued
and are held by NCE.
3. SHORT-TERM BORROWING ARRANGEMENTS
In August 1997, NCE entered into a $225 million credit facility that
expires August 11, 2002, with several banks. The credit facility provides for
$100 million of direct borrowings by NCE until the outstanding common stock of
PS Colorado Credit Corporation, a wholly owned subsidiary of PSCo, is
transferred to NCE. After the transfer, NCE will have access to $225 million of
direct borrowings under the credit facility. Borrowings by the Company are from
NCE. At December 31, 1997, approximately $46 million was outstanding under this
credit facility at a weighted average interest rate of 6.12%.
4. COMMITMENTS AND CONTINGENCIES
Leasing Programs
The Company made payments for leases of various facilities used in the
normal course of business. One lease has been assigned to NCS, the remaining
leases are currently in PSCo's name, however, the Company expects that the
leases will be transferred to NCS in 1998. The majority of the operating leases
are under a leasing program that has initial noncancelable terms of one year,
while the remaining leases have various terms. These leases may be renewed or
replaced. No material restrictions exist in these leasing agreements concerning
dividends, additional debt, or further leasing. Rental expense for the eight
months ended December 31, 1997 was approximately $2.6 million.
<PAGE>
Page 14b
Estimated future minimum lease payments at December 31, 1997 are as
follows (in thousands of dollars):
1998 $7,171
1999 7,498
2000 7,279
2001 2,683
2002 47
All years thereafter 38
Service Agreements
In 1995, PSCo outsourced approximately 370 positions as part of a ten-year
service agreement with IBM Global Services, formerly Integrated Systems
Solutions Corporation, to manage most of PSCo's information technology systems
and network infrastructure. Effective May 1, 1997, the agreement was assigned to
NCS and amended to include SPS' information technology systems and network
infrastructure. The service agreement terminates in February 2005.
For the eight months ended December 31, 1997, NCS payments to IBM Global
Services were approximately $50 million. The total estimated remaining
commitment under this agreement is approximately $322 million, with estimated
annual payments ranging from $42 million to $52 million.
Contracts
NCS entered into a purchase agreement in 1997 with Learjet to acquire a
Learjet 45. The purchase price is anticipated to be approximately $8.2 million.
A $0.5 million deposit was paid in September 1997, an additional $0.5 million
will be paid in September 1998 and the balance is due upon delivery, which is
anticipated on or about August 1999.
Year 2000 Costs
Based on a preliminary analysis, the Company expects to incur costs of
approximately $29.1 million over the next two years to modify its computer
software, hardware and other automated systems used in operations enabling
proper data processing related to the year 2000 and beyond. The majority of
these costs will be allocated to NCE's operating utilities. The Company
continues to evaluate appropriate courses of corrective action, including the
replacement of certain systems. A significant portion of these costs will
represent the redeployment of existing information technology resources. If such
modifications and conversions are not completed timely, the year 2000 problem
may have a material impact on the operations of the Company. Management does not
anticipate these activities will have a material adverse impact on the financial
position, results of operations or cash flows of the Company.
5. EMPLOYEE BENEFITS
Defined Benefit Plans
The Company participates in PSCo's and SPS' noncontributory defined
benefit retirement plans (the Retirement Plans), which provide retirement and
certain other benefits to its officers and employees. The Company's policy is to
fund its accrued costs of the Retirement Plans. Certain new NCE pension plans
will be established in 1998 which may change benefits provided to employees of
the Company.
Assets of the Retirement Plan consists primarily of U.S. government and
agency obligations, bonds and common stocks. PSCo's and SPS' funding policies
are to contribute annually, at a minimum, the amount necessary to satisfy the
Internal Revenue Service funding standards.
<PAGE>
Page 14c
Additionally, the Company participated in PSCo's and SPS' noncontributory
defined benefit supplemental retirement income plan (the Supplemental Plan) for
qualifying executive personnel. The Supplemental Plan is unfunded, and benefits
due under the plan are paid out of the Company's general funds. Net allocated
periodic pension cost for the Supplemental Plans for the Company was $1.5
million for the eight months ended December 31, 1997.
The net pension expense for the NCE system for 1997 was comprised of (in
thousands of dollars):
Service cost.............................. $ 18,418
Interest cost on projected benefit obligation 68,327
Actual return on plan assets.............. (189,597)
Amortization of net transition assets over
15-17 year periods* .................... (7,238)
Deferral and other items.................. 100,192
-------
NCE's net pension expense (benefit)
for 1997 $ (9,898)
=========
Amount Allocated to NCS for 8 months of 1997 $ (1,099)
=========
* PSCo is amortizing its net transition assets over 17 years and SPS is
amortizing its net transition assets over 15 years.
1997
PSCo SPS**
---- -----
Significant assumptions:
Discount rate 7.75% 7.5/8.0%
Expected long-term increase in compensation
level 4.25% 6.0/4.5%
Expected weighted average long-term rate
of return on assets 9.75% 9.75%
** Assumptions used May to December 1997 period.
Variances between actual experience and assumptions for costs and returns
on assets are amortized over the average remaining service lives of employees in
the plans.
At December 31, 1997, the fair value of the plan assets exceeded the
accumulated benefit obligation by approximately 30%. At December 31, 1997,
approximately 98%, of the actuarial present values of accumulated plan benefits
were vested.
Defined Contribution Plans
The Company maintains defined contribution plans which cover substantially
all employees. Total contributions to these plans by the Company for the period
ending December 31, 1997, totaled approximately $3.9 million.
Postretirement Benefits Other Than Pensions
The Company provides certain post-retirement health care and life
insurance benefits for substantially all employees who reach retirement age
while working for the Company. Historically PSCo and SPS have recorded the cost
of these benefits for these plans on a pay-as-you-go basis. The subsidiaries of
NCE have adopted SFAS 106 which requires the accrual, during the years that an
employee renders service to the Company, of the expected cost of providing these
benefits to the employee. The Company is amortizing the transition obligations
for these plans over a period of 20 years.
<PAGE>
Page 14d
The net periodic postretirement benefit costs for NCE system for 1997 was
comprised of (in thousands of dollars):
Service cost................................ $ 6,121
Interest cost............................... 26,537
Return on plan assets....................... (9,240)
Curtailment expense......................... 3,323
Amortization of net transition obligation
over a 20 year amortization period and
deferrals................................. 14,992
--------
NCE's net postretirement benefit costs...... $ 41,733
========
Amount allocated to NCS for 8 months of 1997 $ 4,256
========
1997
PSCo SPS**
---- -----
Significant assumptions:
Discount rate............................. 7.75% 7.5/8.0%
Expected long-term increase in compensation
level ................................. 4.00% 6.0/4.5%
Expected weighted average long-term rate
of return on assets...................... 9.75% 9.75%
** Assumptions used for May to December 1997 period.
Plan assets are stated at fair value and are comprised primarily of
corporate debt and equity securities, a real estate fund, government securities
and other short-term investments held either directly or in commingled funds. At
December 31, 1997, the accumulated benefit obligation substantially exceeded the
fair value of the plan assets. The Company is currently funding the amounts
approximately equal to postretirement benefit expense.
6. INCOME TAXES
The provision for income taxes for the period ending December 31, 1997
consists of the following (in thousands of dollars):
Current income taxes:
Federal..... $(1,575)
State ...... (237)
----
Total current income taxes (1,812)
------
Deferred income taxes:
Federal..... 1,728
State ...... 160
-----
Total deferred income taxes 1,888
-----
Total provision for income taxes $ 76
-------
<PAGE>
Page 14e
A reconciliation of the statutory U.S. income tax rate and the effective
tax rates for the period ending December 31, 1997 follows (in thousands of
dollars, except percentages):
1997
----
Tax computed at U.S. statutory rate on
pre-tax accounting income $ 27 35%
Increase (decrease) in tax from:
State income taxes, net of federal
income taxes benefit 6 8.5%
Non-deductible business meals 43 56.5%
----- -----
Total income taxes 76 100%
----- ----
<PAGE>
Page 15
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
For the Period Ended December 31, 1997
SCHEDULE XV--COMPARATIVE INCOME STATEMENT
(thousands of dollars)
CURRENT PRIOR
ACCOUNT DESCRIPTION YEAR YEAR
- ------- ----------- ---- ----
INCOME
457 Services rendered to associate companies $ 150,077 $ -
458 Services rendered to nonassociate companies - -
421 Miscellaneous income and loss 107 -
--------- ---------
TOTAL INCOME 150,184 -
--------- ---------
EXPENSES
920 Salaries and wages 39,845 -
921 Office supplies and expenses 82,816 -
922 Administrative expenses transferred - credit - -
923 Outside services employed 7,893 -
924 Property insurance - -
925 Injuries and damages 334 -
926 Employee pensions and benefits 13,300 -
928 Regulatory commission expenses - -
930.1 General advertising expenses 146 -
930.2 Miscellaneous general expenses 16 -
931 Rents 2,620 -
932 Maintenance of structures and equipment - -
403 Depreciation and amortization expense - -
408 Taxes other than income taxes 2,241 -
409 Income taxes (1,812) -
410 Provision for deferred income taxes 4,623 -
411 Provision for deferred income taxes - credit (2,735) -
411.5 Investment tax credit - -
426.1 Donations 327 -
426.5 Other deductions 90 -
427 Interest on long-term debt - -
430 Interest on debt to associate companies 480 -
431 Other interest expense - -
--------- ---------
TOTAL EXPENSE 150,184 -
--------- ---------
NET INCOME OR (LOSS) $ - $ -
========= =========
<PAGE>
Page 16
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
For the Period Ended December 31, 1997
ANALYSIS OF BILLING
ASSOCIATE COMPANIES--ACCOUNT 457
(thousands of dollars)
<TABLE>
<CAPTION>
DIRECT INDIRECT COMPENSATION TOTAL
COSTS COSTS FOR USE AMOUNT
NAME OF ASSOCIATE COMPANY CHARGED CHARGED OF CAPITAL BILLED
- ------------------------- ------- ------- ---------- ------
<S> <C> <C> <C> <C>
457-1 457-2 457-3
Public Service Company of Colorado $ 33,103 $ 74,161 $ - $107,264
Southwestern Public Service Co. 4,994 31,323 - 36,317
Cheyenne Light, Fuel & Power Co. 388 1,892 - 2,280
1480 Welton, Inc. 16 106 - 122
e prime, inc. 100 414 - 514
PS Colorado Credit Corporation 10 209 - 219
PSR Investments, Inc. 2 113 - 115
WestGas InterState, Inc. 2 3 - 5
Quixx Corporation 19 351 - 370
Utility Engineering Corporation - 355 - 355
New Century Energies, Inc. 204 1,816 - 2,020
Natural Fuels Corporation - 62 - 62
New Century International, Inc. 222 - - 222
New Century Cadence, Inc. 212 - - 212
======== ======== ========= ========
TOTAL $ 39,272 $110,805 $ - $150,077
======== ======== ========= ========
</TABLE>
<PAGE>
Page 17
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
For the Period Ended December 31, 1997
ANALYSIS OF BILLING
NONASSOCIATE COMPANIES--ACCOUNT 458
(thousands of dollars)
INSTRUCTIONS: Provide a brief description of the services rendered to each
nonassociate company:
<TABLE>
<CAPTION>
NAME OF DIRECT INDIRECT COMPENSATION EXCESS TOTAL
NONASSOCIATE COSTS COSTS FOR USE TOTAL OR AMOUNT
COMPANY CHARGED CHARGED OF CAPITAL COST DEFICIENCY BILLED
- ------- ------- ------- ---------- ---- ---------- ------
<S> <C> <C> <C> <C>
458-1 458-2 458-3 458-4
None
</TABLE>
<PAGE>
Page 18
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
For the Period Ended December 31, 1997
SCHEDULE XVI--ANALYSIS OF CHARGES FOR SERVICE--ASSOCIATE
AND NONASSOCIATE COMPANIES
(thousands of dollars)
INSTRUCTIONS: Total cost of service will equal for associate and nonassociate
companies the total amount billed under their separate analysis of billing
schedules.
<TABLE>
<CAPTION>
ASSOCIATE COMPANY CHARGES NONASSOCIATE COMPANY CHARGES
DIRECT INDIRECT
ACCOUNT DESCRIPTION OF ITEMS COST COST TOTAL (None)
- ------- -------------------- ---- ---- ----- ------
<S> <C> <C> <C> <C>
920 Salaries and wages $ 7,234 $ 32,611 $ 39,845
921 Office supplies and expenses 30,972 51,844 82,816
922 Administrative expense - - -
923 Outside services employed 302 7,591 7,893
924 Property insurance - - -
925 Injuries and damages 58 276 334
926 Employee pensions and benefits 60 13,240 13,300
928 Regulatory commission expense - - -
930.1 General advertising expenses - 146 146
930.2 Miscellaneous general expense 16 - 16
931 Rents 515 2,105 2,620
932 Maintenance of structures and equipment - - -
403 Depreciation and amortization expense - - -
408 Taxes other than income taxes - 2,241 2,241
409 Income taxes (1,812) - (1,812)
410 Provision for deferred income taxes 4,623 - 4,623
411 Provision for deferred income taxes-credit (2,735) - (2,735)
411.5 Investment tax credit - - -
426.1 Donations 111 216 327
426.5 Other donations - 90 90
427 Interest on long-term debt - - -
431 Other interest expense - - -
-------------------------------------
TOTAL EXPENSES 39,344 110,360 149,704
-------------------------------------
Compensation for use of equity capital - - -
430 Interest on debt to associate companies - 480 480
=====================================
TOTAL COST OF SERVICE $ 39,344 $ 110,840 $ 150,184
=====================================
</TABLE>
<PAGE>
Page 19
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
For the Period Ended December 31, 1997
SCHEDULE XVII--SCHEDULE OF EXPENSE
BY DEPARTMENT OR SERVICE FUNCTION
(thousands of dollars)
INSTRUCTIONS: Indicate each department or service
function (See Instruction 01-3 General Structure
of Accounting System: Uniform System of Accounts).
<TABLE>
<CAPTION>
DEPARTMENT OR SERVICE FUNCTION
------------------------------
CEO
TOTAL EXECUTIVE DIRECT CORPORATE GENERAL
ACCOUNT DESCRIPTION OF ITEMS AMOUNT OVERHEAD SERVICES REPORTS COMMUNICATIONS COUNSEL
- ------- -------------------- ------ -------- -------- ------- -------------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
920 Salaries and wages $ 39,845 $ - $ 2,693 $ 721 $ 799 $ 620
921 Office supplies and expenses 82,816 5,152 7,954 1,132 753 2,803
922 Administrative expense - - - - - -
923 Outside services employed 7,893 - 580 52 370 1,776
924 Property insurance - - - - - -
925 Injuries and damages 334 (198) 7 3 2 2
926 Employee pensions and benefits 13,300 (5,407) 315 161 137 115
928 Regulatory commission expense - - - - - -
930.1 General advertising expenses 146 - - - 146 -
930.2 Miscellaneous general expense 16 - 1 15 - -
931 Rents 2,620 (1,119) - - - -
932 Maintenance of structures and equipment - - - - - -
403 Depreciation and amortization expense - - - - - -
408 Taxes other than income taxes 2,241 (1,322) 24 9 8 6
409 Income taxes (1,812) - - - - -
410 Provision for deferred income taxes 4,623 - - - - -
411 Provision for deferred income taxes-credit (2,735) - - - - -
411.5 Investment tax credit - - - - - -
426.1 Donations 327 - - - 246 -
426.5 Other donations 90 - 73 - - -
427 Interest on long-term debt - - - - - -
430 Interest on debt to associate companies 480 - - - - -
431 Other interest expense - - - - - -
==========================================================================
TOTAL EXPENSES $ 150,184 $ (2,894) $ 11,647 $ 2,093 $ 2,461 $ 5,322
==========================================================================
</TABLE>
<PAGE>
Page 19a
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
For the Period Ended December 31, 1997
SCHEDULE XVII--SCHEDULE OF EXPENSE
BY DEPARTMENT OR SERVICE FUNCTION
(thousands of dollars)
INSTRUCTIONS: Indicate each department or service
function (See Instruction 01-3 General Structure
of Accounting System: Uniform System of Accounts).
<TABLE>
<CAPTION>
DEPARTMENT OR SERVICE FUNCTION
------------------------------
CORP CFO
PLANNING COMMODITY PURCHASED ENERGY/ DIRECT
ACCOUNT DESCRIPTION OF ITEMS & DEVELOP SERVICES POWER ENVIRONMENTAL REPORTS
- ------- -------------------- --------- -------- ----- ------------- -------
<S> <C> <C> <C> <C> <C> <C>
920 Salaries and wages $ 1,187 $ 2,667 $ 423 $ 1,686 $ 4,448
921 Office supplies and expenses 1,479 1,723 299 1,288 33,299
922 Administrative expense - - - - -
923 Outside services employed 544 67 - 1,053 811
924 Property insurance - - - - -
925 Injuries and damages 3 7 - 4 15
926 Employee pensions and benefits 214 409 38 197 1,089
928 Regulatory commission expense - - - - -
930.1 General advertising expenses - - - - -
930.2 Miscellaneous general expense - - - - -
931 Rents - - - - 515
932 Maintenance of structures and equipment - - - - -
403 Depreciation and amortization expense - - - - -
408 Taxes other than income taxes 13 25 - 14 49
409 Income taxes - - - - (1,812)
410 Provision for deferred income taxes - - - - 4,623
411 Provision for deferred income taxes-credit - - - - (2,735)
411.5 Investment tax credit - - - - -
426.1 Donations - - - - 1
426.5 Other donations - - - - 1
427 Interest on long-term debt - - - - -
430 Interest on debt to associate companies - - - - -
431 Other interest expense - - - - -
---------------------------------------------------------------
TOTAL EXPENSES $ 3,440 $ 4,898 $ 760 $ 4,242 $ 40,304
===============================================================
</TABLE>
<PAGE>
Page 19b
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
For the Period Ended December 31, 1997
SCHEDULE XVII--SCHEDULE OF EXPENSE
BY DEPARTMENT OR SERVICE FUNCTION
(thousands of dollars)
INSTRUCTIONS: Indicate each department or service
function (See Instruction 01-3 General Structure
of Accounting System: Uniform System of Accounts).
<TABLE>
<CAPTION>
DEPARTMENT OR SERVICE FUNCTION
------------------------------
HUMAN REGULATORY CONTROLLERS DESIGN
ACCOUNT DESCRIPTION OF ITEMS RESOURCES ADMINISTRATION ORGANIZATION SALES ENGINEERING
- ------- -------------------- --------- -------------- ------------ ----- -----------
<S> <C> <C> <C> <C> <C> <C>
920 Salaries and wages $ 2,607 $ 1,414 $ 2,754 $ 3,138 $ 4,616
921 Office supplies and expenses (6,041) 795 1,337 2,929 2,585
922 Administrative expense - - - - -
923 Outside services employed 816 7 345 5 87
924 Property insurance - - - - -
925 Injuries and damages 12 4 366 9 14
926 Employee pensions and benefits 10,639 222 526 467 2,298
928 Regulatory commission expense - - - - -
930.1 General advertising expenses - - - - -
930.2 Miscellaneous general expense - - - - -
931 Rents - - 3,224 - -
932 Maintenance of structures and equipment - - - - -
403 Depreciation and amortization expense - - - - -
408 Taxes other than income taxes 3,179 14 31 33 47
409 Income taxes - - - - -
410 Provision for deferred income taxes - - - - -
411 Provision for deferred income taxes-credit - - - - -
411.5 Investment tax credit - - - - -
426.1 Donations - - (31) 111 -
426.5 Other donations - - - 15 1
427 Interest on long-term debt - - - - -
430 Interest on debt to associate companies - - 480 - -
431 Other interest expense - - - - -
---------------------------------------------------------------
TOTAL EXPENSES $11,212 $ 2,456 $ 9,032 $ 6,707 $ 9,648
===============================================================
</TABLE>
<PAGE>
Page 19c
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
For the Period Ended December 31, 1997
SCHEDULE XVII--SCHEDULE OF EXPENSE
BY DEPARTMENT OR SERVICE FUNCTION
(thousands of dollars)
INSTRUCTIONS: Indicate each department or service
function (See Instruction 01-3 General Structure
of Accounting System: Uniform System of Accounts).
<TABLE>
<CAPTION>
DEPARTMENT OR SERVICE FUNCTION
------------------------------
CONSTRUCTION GAS PLANNING, FINANCE
OPERATION & CUSTOMER MARKETING AND ENERGY
ACCOUNT DESCRIPTION OF ITEMS MAINTENANCE SERVICE MARKETING & SUPPLY TREASURY SUPPLY
- ------- -------------------- ----------- ------- --------- ------------ --------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
920 Salaries and wages $ 580 $ 5,682 $ 2,057 $ 1,263 $ 440 $ 50
921 Office supplies and expenses 225 21,299 2,320 1,113 276 96
922 Administrative expense - - - - - -
923 Outside services employed 198 210 775 83 114 -
924 Property insurance - - - - - -
925 Injuries and damages 2 73 5 3 1 -
926 Employee pensions and benefits 105 1,032 388 275 75 5
928 Regulatory commission expense - - - - - -
930.1 General advertising expenses - - - - - -
930.2 Miscellaneous general expense - - - - - -
931 Rents - - - - - -
932 Maintenance of structures and equipment - - - - - -
403 Depreciation and amortization expense - - - - - -
408 Taxes other than income taxes 5 69 19 13 4 1
409 Income taxes - - - - - -
410 Provision for deferred income taxes - - - - - -
411 Provision for deferred income taxes-credit - - - - - -
411.5 Investment tax credit - - - - - -
426.1 Donations - - - - - -
426.5 Other donations - - - - - -
427 Interest on long-term debt - - - - - -
430 Interest on debt to associate companies - - - - - -
431 Other interest expense - - - - - -
-----------------------------------------------------------------------
TOTAL EXPENSES $ 1,115 $ 28,365 $ 5,564 $ 2,750 $ 910 $ 152
=======================================================================
</TABLE>
<PAGE>
Page 20
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
For the Period Ended December 31, 1997
DEPARTMENTAL ANALYSIS OF SALARIES--ACCOUNT 920
(thousands of dollars)
<TABLE>
<CAPTION>
DEPARTMENTAL SALARY EXPENSE
-----------------------------------------------------------
INCLUDED IN AMOUNTS BILLED TO:
PARENT NUMBER OF
NAME OF DEPARTMENT TOTAL COMPANY OTHER NON- PERSONNEL
OR SERVICE FUNCTION AMOUNT (NCE) ASSOCIATES ASSOCIATES END OF YEAR
- ------------------- ------ ----- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Executive Services $ 2,693 $ 250 $ 2,443 $ - 42
CEO Direct Reports 721 43 678 - 33
Corporate Communications 799 53 746 - 26
General Counsel 620 39 581 - 13
Corporate Planning & Development 1,187 61 1,126 - 34
Commodity Services 2,667 - 2,667 - 83
Purchased Power 423 - 423 - 18
Energy & Environmental 1,686 - 1,686 - 67
CFO Direct Reports 4,448 8 4,440 - 209
Human Resources 2,607 2 2,605 - 94
Regulatory Administration 1,414 - 1,414 - 38
Controllers Organization 2,754 129 2,625 - 76
Sales 3,138 - 3,138 - 107
Design Engineering 4,616 - 4,616 - 151
Construction, Oper & Maintenance 580 - 580 - 19
Customer Service 5,682 - 5,682 - 186
Marketing 2,057 - 2,057 - 70
Gas Planning, Marketing & Supply 1,263 - 1,263 - 39
Finance & Treasury 440 25 415 - 18
Energy Supply 50 - 50 - 2
=====================================================================
TOTAL $ 39,845 $ 610 $ 39,235 $ - 1,325
=====================================================================
</TABLE>
<PAGE>
PAGE 21
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
For the Period Ended December 31, 1997
OUTSIDE SERVICES EMPLOYED--ACCOUNT 923
(thousands of dollars)
INSTRUCTIONS: Provide a breakdown of outside services employed. If the aggregate
amounts paid to any one payee and included within one category is less than
$25,000, only the aggregate number and amount of all such payments included
within the subaccounts need be shown. Provide a subtotal for each type of
service.
<TABLE>
<CAPTION>
RELATIONSHIP
SERVICES A'=ASSOCIATED
FROM WHOM PURCHASED PROVIDED "NA"=NONASSOCIATED AMOUNT
------------------- -------- ------------------ ------
<S> <C>
Legal Services
Baker & Hostetler Legal NA $ 65
Doherty Rumble & Butler, PC Legal NA 51
Ducker, Seawell & Montgomery, PC Legal NA 29
Faegre & Benson Legal NA 111
Gorsuch Kirgis, LLC Legal NA 42
Hamil Professional Corp. Legal NA 31
Hogan & Hartson, LLP Legal NA 111
Knapp & Rome, LLC Legal NA 33
Leboeuf, Lamb, Greene & MacRae Legal NA 57
Littler, Mendelson, Fastiff Legal NA 57
Long, Aldridge & Norman Legal NA 59
Shaw, Pittman, Potts & Trowbridge Legal NA 33
Sherman & Howard Legal NA 227
Skadden, Arps, Slate, Meagher Legal NA 333
Slivka, Robinson, Waters & Odorisio Legal NA 259
Other (26) Legal NA 169
-------
Total Legal Services 1,667
-------
Auditing, Tax and Accounting Services
Arthur Andersen, LLP Auditing, Tax and Accounting Services NA 303
-------
Temporary Personnel
Accu Staff, Inc. Temporary Personnel NA 53
Kelly Services Temporary Personnel NA 201
Precision Resources Temporary Personnel A 148
-------
Total Temporary Personnel 402
-------
Consulting Services
Alan W. Burgess Chief Medical Officer NA 35
Allen & Overy International Business Consulting NA 180
Andersen Consulting International Business Consulting NA 53
Co-Development International Supply Chain Consulting NA 127
First Risk Management Legal Division Consulting NA 33
H L Yoh Company SILCO Consulting NA 49
Management Systems International Business Process Improvement NA 544
Mannesmann Dematic Rapistan Corp. Consulting NA 87
</TABLE>
<PAGE>
Page 21a
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
For the Period Ended December 31, 1997
OUTSIDE SERVICES EMPLOYED--ACCOUNT 923
(thousands of dollars)
<TABLE>
<CAPTION>
RELATIONSHIP
SERVICES A'=ASSOCIATED
FROM WHOM PURCHASED PROVIDED "NA"=NONASSOCIATED AMOUNT
------------------- -------- ------------------ ------
<S> <C> <C> <C>
McKinsey & Company, Inc. Consulting NA 42
Policy Assessment Corp Electric Deregulation Consulting NA 44
Saligent, Inc. Data Warehousing Consulting NA 106
Systematic Solutions Competitive Modeling Consulting NA 25
Toeroek Assoc., Inc. Consulting, Title V NA 113
Towers & Perrin Benefits Consulting NA 408
---------
Total Consulting 1,846
---------
Outside Services
Bank of New York Transfer Agent Fee NA 306
Conservation Services, Inc. Environmental NA 264
Enertec, Inc. Software NA 63
Executive Life Insurance Plan Benefits NA 66
First Chicago Trust Transfer Agent Fee NA 137
Health Promotion Management, Inc. Wellness Program NA 147
Insight Research Market Research NA 115
Insights Unlimited Market Research NA 64
KCNC-TV CEAF Advertising NA 50
McCormick Advertising Advertising NA 337
Metretek, Inc. Load Research NA 38
Mildred E. Duran Settlement Agreement NA 64
Morgan Guaranty Trust Financing Services NA 82
Munchiando Trucking, Inc. Freight NA 47
Natural Fuels Corporation Market Development A 83
Pinnacle Motivation Incentive Awards NA 26
Productivity Management Suggestion and Incentive Workshops NA 110
RLW Analytics, Inc. Load Research NA 34
Rocky Mountain Consultants Environmental Remediation NA 42
Rust Environment & Infrastrucure, Inc. Environmental NA 30
South Park Motor Freight NA 56
Thomas & Perkins Advertising NA 209
TQS Research, Inc. Market Development NA 31
TRC Environmental Corp. Environmental NA 67
Utility Engineering Engineering Services A 112
Other (510) Various Outside Services NA 1,095
----------
Total Outside Services 3,675
----------
TOTAL OUTSIDE SERVICES EMPLOYED $ 7,893
=========
</TABLE>
<PAGE>
Page 22
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
For the Period Ended December 31, 1997
EMPLOYEE PENSION AND BENEFITS--ACCOUNT 926
(thousands of dollars)
INSTRUCTIONS: Provide a listing of each pension plan and benefit program
provided by the service company. Such listing should be limited to $25,000.
DESCRIPTION AMOUNT
----------- ------
Incentive Plan $ 327
Pensions (1,099)
Supplemental Executive Retirement Plan 1,500
Employee Savings Plans (401K) 1,379
OPEB-Long-term Health 3,589
OPEB-Long-term Life 667
Managed Health Care 2,263
Other Medical 850
Dental Care 331
Vision Care 53
Long-term Disability 269
Life Insurance 124
Lost time 5,725
Other (2,678)
----------
$ 13,300
==========
<PAGE>
Page 23
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
For the Period Ended December 31, 1997
GENERAL ADVERTISING EXPENSE--ACCOUNT 930.1
(thousands of dollars)
INSTRUCTIONS: Provide a listing of the amount included in Account 930.1,
"General Advertising Expenses", classifying the items according to the nature of
the advertising and as defined in the account definition. If a particular class
includes an amount in excess of $3,000 applicable to a single payee, show
separately the name of the payee and the aggregate amount applicable thereto.
DESCRIPTION NAME OF PAYEE AMOUNT
----------- ------------- ------
New Century Energies Name Recognition McCormick Advertising $ 146
--------
TOTAL $ 146
========
MISCELLANEOUS GENERAL EXPENSES--ACCOUNT 930.2
(thousands of dollars)
DESCRIPTION NAME OF PAYEE AMOUNT
----------- ------------- ------
Stockholder/Trustee Expenses Various $ 16
--------
TOTAL $ 16
========
RENTS--ACCOUNT 931
(thousands of dollars)
TYPE OF PROPERTY AMOUNT
---------------- ------
Office Space Rent $ 2,620
--------
TOTAL $ 2,620
========
<PAGE>
Page 24
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
For the Period Ended December 31, 1997
TAXES OTHER THAN INCOME TAXES--ACCOUNT 408
(thousands of dollars)
INSTRUCTIONS: Provide an analysis of Account 408 "Taxes Other Than Income
Taxes". Separate the analysis into two groups: (1) other than U.S. Government
taxes, and (2) U.S. Government taxes. Specify each of the various kinds of taxes
and show the amounts thereof. Provide a subtotal for each class of tax.
DESCRIPTION AMOUNT
- ----------- ------
Other Than U.S. Government Taxes:
State Unemployment Taxes $ 14
Denver City Tax 27
Aurora City Tax 1
-------
SUBTOTAL 42
-------
U.S. Government Taxes:
Social Security Taxes 2,172
Federal Unemployment Taxes 27
-------
SUBTOTAL 2,199
-------
TOTAL $ 2,241
=======
<PAGE>
Page 25
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
For the Period Ended December 31, 1997
DONATIONS--ACCOUNT 426.1
(thousands of dollars)
INSTRUCTIONS: Provide a listing of the amount included in Acount 426.1,
"Donations", classifying such expenses by its purpose. The aggregate number and
amount of all items of less than $3,000 may be shown in lieu of details.
<TABLE>
<CAPTION>
NAME OF RECIPIENT PURPOSE OF DONATION AMOUNT
- ----------------- ------------------- ------
<S> <C> <C>
Amarillo Area Foundation Contribution to support the Pharmacy
School at Texas Tech $ 20
Boulder Chamber of Commerce Annual membership contribution 3
Citizen's Scholarship Foundation Contribution to support scholarship program 3
City of Arvada Contribution to support educational activities 6
Colorado Alliance For Science Contribution to support the activities of
the organization 5
Colorado State Universities Scholarships 8
Commercial Real Estate Expo Contribution to support the activities of
the organization 5
Golden Spread Council Contribution to support the activities of
the organization 3
Intermountain Partners, Inc. Contribution to support the activities of
the organization 8
Provider's Resource Clearinghouse Contribution to support the activities of
the organization 5
St. Mary of the Plains Hospital Contribution to support the activities of
the organization 5
Texas Tech University Contribution to support the building of
Spirit Arena - Lubbock 20
United Way Contribution to support community service
organizations 33
University of Colorado Contribution to support the Energy 2020 project 5
Other (322) 198
-----
TOTAL $ 327
=====
</TABLE>
<PAGE>
Page 26
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
For the Period Ended December 31, 1997
OTHER DEDUCTIONS--ACCOUNT 426.5
(thousands of dollars)
INSTRUCTIONS: Provide a listing of the amount include in Account 426.5, "Other
Deductions", classifying such expenses according to their nature.
<TABLE>
<CAPTION>
DESCRIPTION NAME OF PAYEE AMOUNT
<S> <C> <C>
Expenditures for Certain Civic, Company employee and administrative costs
Political & Related Activities for civic, political and related activities $ 90
=======
TOTAL $ 90
=======
</TABLE>
<PAGE>
Page 27
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
For the Period Ended December 31, 1997
SCHEDULE XVIII--NOTES TO STATEMENT OF INCOME
INSTRUCTIONS: The space below is provided for important notes regarding the
statement of income or any account thereof. Furnish particulars as to any
significant increases and services rendered or expenses incurred during the
year. Notes related to financial statements shown elsewhere in this report may
be indicated here by reference.
See Notes to Financial Statements on pages 14-14e.
<PAGE>
Page 28
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
For the Period Ended December 31, 1997
ORGANIZATION CHART
<TABLE>
<CAPTION>
ORGANIZATION CHART SERVICE FUNCTION
------------------ ----------------
<S> <C>
Chairman Executive
Audit Services CEO Direct Reports
Aviation CEO Direct Reports
Governmental Affairs CEO Direct Reports
Vice-Chairman Executive
Corporate Communications Corporate Communications
General Counsel General Counsel
Corporate Planning and Development-Sr. V.P. Executive
Business Planning and Development Corp. Planning and Development
Commodity Services-Executive V.P. & V.P. Executive
Commodity Services-all others Commodity Services
Production Services Commodity Services
Energy and Environmental-V.P. Executive
Energy and Environmental-all others Energy and Environmental
Purchased Power and Electric Trading Purchased Power
Marketing and Services-President Executive
Sales-V.P. Executive
Sales-all others Sales
Marketing Marketing
Design Engineering-V.P. Executive
Design Engineering-all others Design Engineering
Construction, Operations and Maintenance-V.P. Executive
Construction, Operations and Maintenance-all others Constr., Oper. and Maint.
Customer Accounts and Services Customer Service
Energy Supply Management and Bulk Power Transport Energy Supply
Gas Planning, Marketing and Supply Gas Plan., Marketing and Supply
Financial and Support Services-CFO Executive
Human Resources-V.P. Executive
Human Resources-all others Human Resources
Regulatory Administration-V.P. Executive
Regulatory Administration-all others Regulatory Administration
Finance and Treasury-Director Executive
Finance and Treasury-all others Finance and Treasury
Accounting - Controller Executive
Accounting-all others Controllers Organization
Information Technology CFO Direct Reports
Supply Chain CFO Direct Reports
Facilities and Real Estate CFO Direct Reports
Shareholder Services CFO Direct Reports
</TABLE>
<PAGE>
Page 29
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
METHODS OF ALLOCATION
Sales Ratio - Based on firm kilowatt-hour electric sales (and/or the equivalent
cubic feet of natural gas sales based on a Btu content, where applicable),
excluding inter-system sales, for the immediate preceding twelve consecutive
calendar months, the numerator of which is for an Operating Company or an
affiliate and the denominator of which is for all Operating Companies and
affected affiliate companies. This ratio will be determined annually, or at such
time as may be required due to a significant change.
Residential Sales Ratio - Based on firm kilowatt-hour electric sales to
residential customers for the immediate preceding twelve consecutive calendar
months, the numerator of which is for an Operating Company or an affiliate and
the denominator of which is for all Operating Companies and affected affiliate
companies. This ratio will be determined annually, or at such time as may be
required due to a significant change.
Business Sales Ratio - Based on firm kilowatt-hour electric sales to business
customers that purchase less than 250 kilowatts for the immediate preceding
twelve consecutive calendar months, the numerator of which is for an Operating
Company or an affiliate and the denominator of which is for all Operating
Companies and affected affiliate companies. This ratio will be determined
annually, or at such time as may be required due to a significant change.
Large Commercial & Industrial Sales Ratio - Based on firm kilowatt-hour electric
sales to large commercial and industrial customers that purchase greater than
250 kilowatts for the immediate preceding twelve consecutive calendar months,
the numerator of which is for an Operating Company or an affiliate and the
denominator of which is for all Operating Companies and affected affiliate
companies. This ratio will be determined annually, or at such time as may be
required due to a significant change.
Electric Peak Load Ratio - Based on the sum of the monthly electric maximum
system demands for the immediately preceding twelve consecutive calendar months,
the numerator of which is for an Operating Company and the denominator of which
is for all Operating Companies. This ratio will be determined annually, or at
such time as may be required due to a significant change.
Customers Ratio - Based on the sum of total electric customers (and/or gas
customers, or residential, business and large commercial and industrial
customers where applicable) at the end of each month for the immediately
proceeding twelve consecutive calendar months, the numerator of which is for an
Operating Company or an affected affiliate company and the denominator of which
is for all Operating Companies and affected affiliate companies. This ratio will
be determined annually, or at such time as may be required due to a significant
change.
Employees Ratio - Based on the sum of the number of employees at the end of each
month for the immediately preceding twelve calendar months, the numerator of
which is for an Operating Company or an affected affiliate company and the
denominator of which is for all Operating Companies and affected affiliate
companies. This ratio will be determined annually, or at such time as may be
required due to a significant change.
<PAGE>
Page 29a
Construction Expenditures Ratio - Based on construction or capital expenditures,
net of reimbursements, for the immediately preceding twelve consecutive calendar
months, the numerator of which is for an Operating Company or an affected
affiliate company and the denominator of which is for all Operating Companies
and affected affiliate companies. This ratio will be determined annually, or at
such time as may be required due to a significant change.
Transmission Construction Expenditures Ratio - Based on transmission
construction or capital expenditures, net of reimbursements, for the immediately
preceding twelve consecutive calendar months, the numerator of which is for an
Operating Company or an affected affiliate company and the denominator of which
is for all Operating Companies and affected affiliate companies. This ratio will
be determined annually, or at such time as may be required due to a significant
change.
Distribution Construction Expenditures Ratio - Based on distribution
construction or capital expenditures, net of reimbursements, for the immediately
preceding twelve consecutive calendar months, the numerator of which is for an
Operating Company or an affected affiliate company and the denominator of which
is for all Operating Companies and affected affiliate companies. This ratio will
be determined annually, or at such time as may be required due to a significant
change.
Substation Construction Expenditures Ratio - Based on substation construction or
capital expenditures, net of reimbursements, for the immediately preceding
twelve consecutive calendar months, the numerator of which is for an Operating
Company or an affected affiliate company and the denominator of which is for all
Operating Companies and affected affiliate companies. This ratio will be
determined annually, or at such time as may be required due to a significant
change.
Total Common Equity Ratio, with 20 Percent of Common Equity assigned to New
Century Energies, Inc. - Based on the sum of the common equity at the end of
each month for the immediately preceding twelve calendar months, the numerator
of which is for an Operating Company or an affected affiliate company and the
denominator of which is for all Operating Companies and affected affiliate
companies. This ratio will be determined annually, or at such time as may be
required due to significant changes.
Revenue Ratio - Based on the sum of the revenue at the end of each month for the
immediately preceding twelve consecutive calendar months, the numerator of which
is for an Operating Company or an affected affiliate company and the denominator
of which is for all Operating Companies and affected affiliate companies. This
ratio will be determined annually, or at such time as may be required due to
significant changes.
Wholesale Revenue Ratio - Based on the sum of the electric wholesale revenue at
the end of each month for the immediately preceding twelve consecutive calendar
months, the numerator of which is for an Operating Company or an affected
affiliate company and the denominator of which is for all Operating Companies
and affected affiliate companies. This ratio will be determined annually, or at
such time as may be required due to significant changes.
Industrial Revenue Ratio - Based on the sum of the electric industrial revenue
at the end of each month for the immediately preceding twelve consecutive
calendar months, the numerator of which is for an Operating Company or an
affected affiliate company and the denominator of which is for all Operating
Companies and affected affiliate companies. This ratio will be determined
annually, or at such time as may be required due to significant changes.
<PAGE>
Page 29b
Payroll Ratio - Based on the sum of the payroll at the end of each month for the
immediately preceding twelve consecutive calendar months, the numerator of which
is for an Operating Company or an affected affiliate company and the denominator
of which is for all Operating Companies and affected affiliate companies. This
ratio will be determined annually, or at such time as may be required due to
significant changes.
Electric Mwh Generation - Based on the sum of electric Mwh generated during each
month for the immediately preceding twelve consecutive calendar months, the
numerator of which is for an Operating Company and the denominator of which is
for all Operating Companies. This ratio will be determined annually, or at such
time as may be required due to significant changes.
Electric Kwh Purchased Power Ratio - Based on the sum of electric Kwh purchased
power during each month for the immediately preceding twelve consecutive
calendar months, the numerator of which is for an Operating Company and the
denominator of which is for all Operating Companies. This ratio will be
determined annually, or at such time as may be required due to significant
changes.
Total Assets Ratio - Based on the total assets at year end for the preceding
year, the numerator of which is for an Operating Company or affected affiliate
company and the denominator of which is for all Operating Companies and affected
affiliate companies. This ratio will be determined annually, or at such time as
may be required due to significant changes.
Cost of Gas Sold - Based on the sum of the cost of gas sold at the end of each
month for the immediately preceding twelve consecutive calendar months, the
numerator of which is for an Operating Company or an affected affiliate company
and the denominator of which is for all Operating Companies and affected
affiliate companies. This ratio will be determined annually, or at such time as
may be required due to significant changes.
Gas Throughput Ratio - Based on the sum of the gas throughput dekatherms at the
end of each month for the immediately preceding twelve consecutive calendar
months, the numerator of which is for an Operating Company or an affected
affiliate company and the denominator of which is for all Operating Companies
and affected affiliate companies. This ratio will be determined annually, or at
such time as may be required due to significant changes.
Gas Transport Dekatherms - Based on the sum of transported gas dekatherms at the
end of each month for the immediately preceding twelve consecutive calendar
months, the numerator of which is for an Operating Company or an affected
affiliate company and the denominator of which is for all Operating Companies
and affected affiliate companies. This ratio will be determined annually, or at
such time as may be required due to significant changes.
Payment Transaction Ratio - Based on the sum of the number of payment
transactions processed during each month for the immediately preceding twelve
consecutive calendar months, the numerator of which is for an Operating Company
or an affected affiliate company and the denominator of which is for all
Operating Companies and affected affiliate companies. This ratio will be
determined annually, or at such time as may be required due to significant
changes.
Accounting Transactions Ratio - Based on the sum of the number of accounting
transactions processed during each month for the immediately preceding twelve
consecutive calendar months, the numerator of which is for an Operating Company
or an affected affiliate company and the denominator of which is for all
Operating Companies and affected affiliate companies.
<PAGE>
Page 30
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
ANNUAL STATEMENT OF COMPENSATION FOR USE OF CAPITAL BILLED
Associate companies were not charged for use of capital during 1997.
<PAGE>
Page 31
ANNUAL REPORT OF NEW CENTURY SERVICES, INC.
SIGNATURE CLAUSE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935 and the rules and regulations of the Securities and Exchange Commission
issued thereunder, the undersigned company has duly caused this report to be
signed on its behalf by the undersigned officer thereunto duly authorized.
New Century Services, Inc.
-------------------------------------
(Name of Reporting Company)
By: /s/ Richard C. Kelly
-------------------------------------
(Signature of Signing Officer)
Richard C. Kelly, Executive
Vice President and Chief Financial Officer
-------------------------------------
(Printed Name and Title of Signing Officer)
Date: April 30, 1998
<TABLE> <S> <C>
<ARTICLE> OPUR2
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NEW CENTURY
SERVICES, INC. BALANCE SHEET & INCOME STATEMENT AS OF DECEMBER 31, 1997.
</LEGEND>
<CIK> 0001004858
<NAME> New Century Energies, Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> MAY-01-1997
<PERIOD-END> DEC-31-1997
<BOOK-VALUE> PER-BOOK
<NET-SERVICE-COMPANY-PROPERTY> 9
<TOTAL-INVESTMENTS> 0
<TOTAL-CURRENT-ASSETS> 166,381
<TOTAL-DEFERRED-DEBITS> 3,604
<OTHER-ASSETS-AND-DEBITS> 169,994
<TOTAL-ASSETS-AND-DEBITS> 169,994
<TOTAL-PROPRIETARY-CAPITAL> 1
<TOTAL-LONG-TERM-DEBT> 0
<NOTES-PAYABLE> 0
<NOTES-PAYABLE-ASSOCIATE-COMP> 45,950
<OTHER-CURR-AND-ACCRUED-LIAB> 164,316
<TOTAL-DEFERRED-CREDITS> 3,789
<DEFERRED-INCOME-TAX> 0
<TOT-LIABIL-AND-PROPRIET-CAP> 169,994
<SERVICES-ASSOCIATE-COMPANIES> 150,077
<SERVICES-NON-ASSOCIATE-COMP> 0
<MISC-INCOME-OR-LOSS> 107
<TOTAL-INCOME> 150,184
<SALARIES-AND-WAGES> 39,845
<EMPLOYEE-PENSION-AND-BENEFIT> 13,300
<OTHER-EXPENSES> 150,184
<TOTAL-EXPENSES> 150,184
<NET-INCOME> 0
<TOTAL-EXPENSES-DIRECT-COST> 39,272
<TOTAL-EXPENSES-INDIRECT-COST> 110,805
<TOT-EXP-DIRECT-AND-INDIRECT> 150,184
<PERSONNEL-END-OF-YEAR> 1,325
</TABLE>
