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
or
Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For Quarter Ended September 30, 1995
Commission File Number 1-3034
NORTHERN STATES POWER COMPANY
(Exact name of registrant as specified in its charter)
Minnesota 41-0448030
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
414 Nicollet Mall, Minneapolis, Minnesota 55401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 330-5500
None
Former name, former address and former fiscal year, if changed
since last report
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
_____ _____
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Class Outstanding at October 31, 1995
Common Stock, $2.50 par value 68,099,395 shares
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Northern States Power Company (Minnesota) and Subsidiaries
Consolidated Statements of Income (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
(Thousands of dollars)
<S> <C> <C> <C> <C>
Utility operating revenues
Electric.................................................... $619,238 $570,522 $1,636,169 $1,577,904
Gas......................................................... 45,738 41,806 279,647 299,850
Total .................................................... 664,976 612,328 1,915,816 1,877,754
Utility operating expenses
Fuel for electric generation................................ 86,983 88,163 250,920 248,887
Purchased and interchange power............................. 74,364 70,028 194,575 194,071
Cost of gas purchased and transported....................... 26,302 24,987 165,914 188,617
Other operation............................................. 78,115 79,742 236,590 231,975
Maintenance................................................. 38,155 39,521 119,180 121,434
Administrative and general.................................. 45,277 46,814 128,769 138,177
Conservation and energy management.......................... 16,395 7,783 36,047 23,256
Depreciation and amortization............................... 72,776 68,628 216,676 204,340
Taxes: Property and general................................ 63,816 59,939 188,169 178,315
Current income tax expense..................... 52,720 40,432 120,593 118,174
Deferred income tax expense.................... 710 (436) (2,364) (2,028)
Deferred investment tax credits recognized..... (2,229) (2,205) (6,705) (7,717)
Total................................................... 553,384 523,396 1,648,364 1,637,501
Utility operating income..................................... 111,592 88,932 267,452 240,253
Other income and expense
Allowance for funds used during construction - equity....... 1,460 1,052 4,658 3,245
Equity in earnings of unconsolidated investees.............. 9,618 8,143 28,088 20,899
Other income (expense) - net................................ (2,067) 5,273 10,430 6,517
Total other income...................................... 9,011 14,468 43,176 30,661
Income before interest charges................................ 120,603 103,400 310,628 270,914
Interest charges
Interest on long-term debt.................................. 29,067 23,863 84,110 69,154
Other interest and amortization............................. 4,770 5,873 16,537 13,280
Allowance for funds used during construction - debt......... (2,037) (2,401) (6,823) (6,188)
Total................................................... 31,800 27,335 93,824 76,246
Net income ................................................... 88,803 76,065 216,804 194,668
Preferred stock dividends..................................... 3,061 3,097 9,388 9,210
Earnings available for common stock .......................... $85,742 $72,968 $207,416 $185,458
Average number of common and equivalent
shares outstanding (000's).................................. 67,496 66,867 67,233 66,799
Earnings per average common share............................. $1.27 $1.09 $3.09 $2.78
Common dividends declared per share........................... $0.675 $0.660 $2.010 $1.965
Statements of Retained Earnings (Unaudited)
Balance at beginning of period................................ $1,215,505 $1,152,787 $1,183,191 $1,127,372
Net income for period......................................... 88,803 76,065 216,804 194,668
Dividends declared:
Cumulative preferred stock.................................. (3,061) (3,097) (9,388) (9,210)
Common stock................................................ (45,462) (44,158) (134,822) (131,233)
Balance at end of period...................................... $1,255,785 $1,181,597 $1,255,785 $1,181,597
The Notes to Financial Statements are an integral part of the Statements of Income and Retained Earnings.
</TABLE>
Northern States Power Company (Minnesota) and Subsidiaries
Consolidated Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
(Thousands of dollars)
<S> <C> <C>
ASSETS
Utility Plant
Electric........................................................ $6,513,675 $6,372,317
Gas............................................................. 702,025 677,233
Common.......................................................... 296,819 262,506
Total....................................................... 7,512,519 7,312,056
Accumulated provision for depreciation........................ (3,317,149) (3,116,811)
Nuclear fuel.................................................... 829,732 797,097
Accumulated provision for amortization........................ (743,373) (718,690)
Net utility plant........................................... 4,281,729 4,273,652
Current Assets
Cash and cash equivalents....................................... 45,871 41,055
Short-term investments.......................................... 154 892
Accounts receivable - net....................................... 300,023 280,858
Accrued utility revenues........................................ 78,731 98,651
Federal income tax and interest receivable...................... 0 28,858
Fossil fuel inventory - at average cost......................... 50,202 56,960
Materials and supplies - at average cost........................ 103,000 101,878
Prepayments and other........................................... 47,018 56,075
Total current assets.......................................... 624,999 665,227
Other Assets
Regulatory assets............................................... 378,638 357,576
Investments in non-regulated projects and other investments..... 278,254 201,329
External decommissioning fund................................... 188,008 145,467
Non-regulated property - net.................................... 179,861 172,961
Federal income tax and interest receivable...................... 57,064 56,358
Intangible assets and other..................................... 84,725 81,001
Total other assets........................................... 1,166,550 1,014,692
TOTAL ASSETS................................................ $6,073,278 $5,953,571
LIABILITIES AND EQUITY
Capitalization
Common stock equity:
Common stock and premium - authorized 160,000,000
shares of $2.50 par value, issued shares:
1995, 67,903,547; 1994, 66,922,144.......................... $756,921 $713,180
Retained earnings............................................. 1,255,785 1,183,191
Leveraged common stock held by ESOP........................... (12,254) (2,990)
Currency translation adjustments - net........................ 2,692 3,586
Total common stock equity................................... 2,003,144 1,896,967
Cumulative preferred stock and premium - authorized
7,000,000 shares of $100 par value; outstanding
shares: 1995 and 1994, 2,400,000
without mandatory redemption.................................. 240,469 240,469
Long-term debt.................................................. 1,545,244 1,463,354
Total capitalization........................................ 3,788,857 3,600,790
Current Liabilities
Long-term debt due within one year.............................. 26,317 16,106
Other long-term debt potentially due within one year............ 141,600 141,600
Short-term debt - primarily commercial paper.................... 139,448 238,439
Accounts payable................................................ 187,917 234,905
Taxes accrued................................................... 219,267 178,119
Interest accrued................................................ 30,353 28,164
Dividends payable on common and preferred stocks................ 48,680 47,283
Accrued payroll, vacation and other............................. 65,123 79,029
Total current liabilities................................... 858,705 963,645
Other Liabilities
Deferred income taxes........................................... 860,309 848,870
Deferred investment tax credits................................. 166,135 173,838
Regulatory liabilities.......................................... 221,847 200,517
Pension and other benefit obligations........................... 103,061 92,514
Other long-term obligations and deferred income................. 74,364 73,397
Total other liabilities..................................... 1,425,716 1,389,136
Commitments and Contingent Liabilities (See Note 4)
TOTAL LIABILITIES AND EQUITY.............................. $6,073,278 $5,953,571
The Notes to Financial Statements are an integral part of the Balance Sheets.
</TABLE>
Northern States Power Company (Minnesota) and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
1995 1994
(Thousands of dollars)
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income.............................................................. $216,804 $194,668
Adjustments to reconcile net income to cash from operating activities:
Depreciation and amortization......................................... 240,971 226,867
Nuclear fuel amortization............................................. 36,929 34,737
Deferred income taxes................................................. 4,850 (1,788)
Deferred investment tax credits recognized............................ (6,937) (7,950)
Allowance for funds used during construction - equity................. (4,658) (3,245)
Undistributed equity in earnings of unconsolidated investees.......... (22,411) (20,899)
Gain from non-regulated contract terminations......................... (29,850) (9,685)
Cash provided by changes in certain working capital items............. 39,559 29,481
Conservation program expenditures - net of amortization............... (9,320) (18,905)
Cash provided by (used for) changes in other assets and liabilities... 17,303 (29,118)
Net cash provided by operating activities 483,240 394,163
Cash Flows from Investing Activities:
Capital expenditures ................................................... (283,342) (259,529)
Decrease in construction payables....................................... (15,001) (5,259)
Allowance for funds used during construction - equity................... 4,658 3,245
Sale (purchase) of short-term investments - net......................... 738 (1,601)
Investment in external decommissioning fund............................. (23,541) (22,230)
Proceeds from non-regulated project termination settlements............. 12,285 14,000
Investments in non-regulated projects and other......................... (44,476) (89,852)
Net cash used for investing activities (348,679) (361,226)
Cash Flows from Financing Activities:
Change in short-term debt - net issuances (repayments).................. (98,991) 146,205
Proceeds from issuance of long-term debt - net.......................... 274,949 208,525
Loan to ESOP............................................................ (15,000) 0
Repayment of long-term debt (including reacquisition premium)........... (191,571) (267,159)
Proceeds from issuance of common stock - net............................ 43,681 822
Dividends paid.......................................................... (142,813) (139,383)
Net cash used for financing activities (129,745) (50,990)
Net increase (decrease) in cash and cash equivalents....................... 4,816 (18,053)
Cash and cash equivalents at beginning of period........................... 41,055 57,812
Cash and cash equivalents at end of period................................. $45,871 $39,759
The Notes to Financial Statements are an integral part of the Statements of Cash Flows.
</TABLE>
Northern States Power Company (Minnesota) and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of management, the accompanying unaudited
financial statements contain all adjustments necessary to
present fairly the financial position of Northern States Power
Company (Minnesota) (the Company) and its subsidiaries
(collectively, NSP) as of September 30, 1995 and December 31,
1994, the results of its operations for the three and nine
months ended September 30, 1995 and 1994, and its cash flows for
the nine months ended September 30, 1995 and 1994. Due to the
seasonality of NSP's electric and gas sales, operating results
on a quarterly and year-to-date basis are not necessarily an
appropriate base from which to project annual results.
The accounting policies followed by NSP are set forth in
Note 1 to NSP's financial statements in the 1994 Form 10-K. The
following notes should be read in conjunction with such policies
and other disclosures in the Form 10-K.
Certain reclassifications have been made to 1994 financial
information to conform with the 1995 presentation. These
reclassifications had no effect on net income or earnings per
share as previously reported.
1. Proposed Business Combination
On April 28, 1995 NSP and Wisconsin Energy Corporation
(WEC) entered into an Agreement and Plan of Merger, which
provides for a strategic business combination involving NSP and
WEC in a "merger-of-equals" transaction. See further discussion
of the proposed business combination at Part II, Item 5-Other
Information of this report. On July 10, 1995 NSP and WEC filed
an application and supporting testimony with the Federal Energy
Regulatory Commission (FERC) seeking approval of the proposed
merger to form Primergy Corporation. The filing consisted of
the merger application, a proposed joint transmission tariff,
and an amendment to the NSP Interchange Agreement. On September
11, 1995, several parties, who had previously filed for
intervenor status in the FERC merger approval application
filing, filed interventions and protests. NSP has been working
with the intervenors to resolve the issues and has filed
responses to the interventions. On August 4, 1995, similar
filings were made with regulatory agencies in states where NSP
and WEC provide utility services. The state filings included a
request for deferred accounting treatment and rate recovery of
costs incurred associated with the proposed merger. At
September 30, 1995, $11.1 million of costs associated with the
proposed merger had been deferred as a component of Intangible
Assets and Other. On September 13, 1995, the shareholders of
NSP and WEC voted, in their respective shareholder meetings,
approving the plan of merger.
2. Rate Matters
In August 1994, the Company applied to the North Dakota
Public Service Commission (NDPSC) for an annualized electric
rate reduction of $3.6 million to reflect a correction in cost
allocations to the North Dakota jurisdiction. On November 9,
1994, the NDPSC approved the Company's request to make refunds
to customers, effectively implementing the reduction as of June
1, 1994. These refunds were accrued in 1994 and paid in
February 1995. On May 10, 1995, the NDPSC approved a
retroactive refund to residential customers of approximately
$1.5 million for the period January 1, 1989 through June 1, 1994
to reflect corrections to cost allocations for that period.
This refund was accrued in 1994 and paid in June 1995. Also,
the NDPSC approved an annualized rate reduction of $750,000 for
North Dakota commercial and industrial electric customers, which
was effective prospectively on June 1, 1995.
On June 1, 1995, NSP's wholly owned subsidiary, Northern
States Power Company, a Wisconsin corporation (the Wisconsin
Company) filed with the Public Service Commission of Wisconsin
(PSCW) for a $2.7 million increase in natural gas rates and no
change in electric rates to be effective January 1, 1996. On
October 6, 1995, the PSCW ordered a $4.8 million decrease, or approximately
1.7%, on an annual basis in the Wisconsin Company's retail electric rates.
The new rates will take effect January 1, 1996. A decision
regarding the retail gas rate increase is expected by the end of
the year.
3. Business Developments
Non-regulated Acquisitions - On August 1, 1995, NSP's
wholly-owned non-regulated subsidiary, NRG Energy, Inc. (NRG),
closed on its acquisition of a 49 percent limited partnership
interest in the partnerships holding the operating assets of the
district and heating and cooling systems in Pittsburgh and San
Francisco. The interest was acquired from Thermal Ventures,
Inc., which will continue to operate these systems. Current
annual revenue of the San Francisco thermal system is
approximately $9 million, and the annual steam sales volumes are
approximately 700 million pounds. The San Francisco thermal
system provides service to more than 200 buildings. The
Pittsburgh thermal system currently has $8 million of annual
revenue and provides annual steam sales volumes of 300 million
pounds, and chilled water sales volumes of 21 million ton-hours
to 24 customers.
On September 1, 1995, a non-regulated subsidiary of NSP
merged with Kansas City-based Energy Masters Corporation (EMC)
which resulted in the purchase of an 80 percent ownership
interest in EMC by NSP. NSP subsequently assigned its interest
in EMC to Cenergy, Inc. (Cenergy), another wholly owned
subsidiary of NSP. Cenergy has the option to acquire the
remaining 20% of EMC in three years. EMC has offices in seven
states nationwide and specializes in energy efficiency
improvement services for commercial, industrial and
institutional customers. For the latest EMC fiscal year ended
October 31, 1994, EMC, with more than 60 employees, had
operating revenues of $5.9 million. EMC will continue to
operate as a separate legal entity, as a subsidiary of Cenergy.
Non-regulated Project Developments - NRG, through wholly
owned subsidiaries, owns 45% of the San Joaquin Valley Energy
Partnership (SJVEP), which owns four power plants located near
Fresno, California with a total capacity of 55 megawatts.
Through February 1995, the plants operated under long-term
Standard Offer 4 (SO4) power sales contracts with Pacific Gas
and Electric (PG&E) which expire in 2017. On February 28, 1995
PG&E reached basic agreements with SJVEP to acquire the SO4
contracts. The negotiated agreements will result in cost
savings for PG&E customers as well as economic benefits for
SJVEP. Under the terms of the agreements, PG&E has been
released from its contractual obligation to purchase power
generated by SJVEP. Proceeds received from PG&E under the
agreements were used to repay SJVEP debt obligations and recover
investments in the facilities. SJVEP continues to own and
maintain the facilities and to evaluate opportunities to market
power without the prior costs incurred for plant depreciation
and interest on debt. All regulatory approvals for the
agreements were received in the second quarter of 1995. NRG's
share of the pretax gain realized by SJVEP from this
transaction, which was recorded as a component of Other income
(expense)-net in June 1995, was approximately $30 million (26
cents per share after tax). Partially offsetting this gain in
the second quarter was a pretax write-down of approximately $5
million (four cents per share after tax) for investments in
another domestic energy project of NRG.
Nuclear Fuel Disposal - NSP is leading a consortium working
with the Mescalero Apache Tribe to establish a private facility
for interim storage of used nuclear fuel on the Tribe's
reservation in New Mexico. On March 9, 1995, the Mescalero
Tribe in a second Tribal referendum voted in favor of proceeding
with a temporary used nuclear fuel storage site on the Tribe's
reservation land. In addition to the Mescalero Apache Tribe, a
core group of more than 20 United States nuclear utilities has
agreed to support the construction and operation of the interim
storage site. Work on the project is underway in several areas,
including environmental assessment, facility design, and drawing
up the detailed contracts that will govern the construction and
operation of the site. An architect engineering firm and an
environmental contractor have been retained to perform the
environmental and licensing activities. The consortium is
currently scheduled to submit a license application for the
facility to the Nuclear Regulatory Commission (NRC) in December
1996. The spent fuel storage facility is expected to be
operational and able to accept the first shipment of used
nuclear fuel by mid-2002.
4. Commitments and Contingent Liabilities
Legislative Resource Commitments - In 1994, the Minnesota
Legislature established several energy resource and other
commitments for NSP to fulfill as part of its approval of NSP's
Prairie Island nuclear generating plant's temporary nuclear fuel
storage facility. As steps in fulfilling these commitments, NSP: (a)
selected Zond Systems, Inc. to supply 100 megawatts (Mw) of wind
energy to the NSP system by the end of 1996 and obtained a site
designation and construction authorization from the Minnesota
Environmental Quality Board (MEQB); and (b) NSP is reviewing proposals
from several bidders regarding 50 Mw of farm-grown closed-loop biomass
generation. NSP must now secure wind rights from Kenetech Windpower Inc., an
unsuccessful bidder, which has indicated that it will resist the
transfer of wind rights. The 100 Mw increment represents Phase
II of NSP's commitment to 425 Mw of wind generation resources and the 50 Mw
increment represents Phase I of NSP's commitment to 125 Mw of bio-mass
generation resources by the end of 2002 as required by
the Minnesota Legislature. Currently, 25 Mw of wind generation
are already in place. An additional step in fulfilling the
legislative commitments was taken on July 20, 1995 when NSP
filed documents with the MEQB outlining two alternative Goodhue
County sites to be considered for the development of an interim
used nuclear fuel storage facility, as the Minnesota Legislature
required. The MEQB has begun a 12 to 18 month public process to
examine these sites and any others that may be proposed.
Nuclear Insurance - The circumstances set forth in Note 17
to NSP's financial statements contained in the 1994 Form 10-K
appropriately represent the current status of commitments and
contingent liabilities regarding public liability for claims
resulting from any nuclear incident.
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
On April 28, 1995, the Company and WEC entered into an
Agreement and Plan of Merger which provides for a strategic
business combination involving the two companies in a "merger-
of-equals" transaction. Further information concerning this
agreement and proposed transaction and pro forma financial
information with respect thereto is included in Part II of this
report.
Results of Operations
Northern States Power Company's earnings per share for the
third quarter ended September 30, 1995, were $1.27, up $0.18
from the $1.09 earned for the same period a year ago.
In addition to items noted in the 1994 Form 10-K, the
historical and future trends of NSP's operating results have
been and are expected to be impacted by the following factors:
Non-regulated Business Results - Third quarter results
include earnings contributions from non-regulated businesses of
$0.08 per share in 1995 and $0.13 per share in 1994. For the
nine months ended September 30, non-regulated businesses
contributed earnings of $0.49 per share in 1995 and $0.31 per
share in 1994.
The non-regulated earnings for the nine months ended
September 30, 1995 include a gain of approximately $0.26 per
share recorded in June 1995 from a non-regulated power sales
contract termination settlement as discussed in Note 3 to the
Financial Statements. A similar gain of approximately $0.09 per
share, is reflected in the non-regulated earnings for the three
and nine months ended September 30, 1994. Partially offsetting
these gains were write-downs of non-regulated investments in
domestic energy projects of $0.04 per share recorded in both the
second quarter of 1995 and the third quarter of 1994.
Impact of Weather - NSP estimates sales levels under normal
weather conditions and analyzes the approximate effect of
weather on actual sales levels. The following summarizes the
estimated impact of weather on actual utility operating results
(in relation to sales under normal weather conditions):
<TABLE>
<CAPTION>
Increase (Decrease)
1995 vs Normal 1994 vs Normal 1995 vs 1994
<S> <C> <C> <C>
Earnings per Share for:
Quarter Ended
September 30 $0.12 ($0.14) $0.26
Nine Months Ended
September 30 $0.17 ($0.02) $0.19
</TABLE>
Third Quarter 1995 Compared with Third Quarter 1994
Utility Operating Results
Electric revenues for the third quarter 1995 compared with
the third quarter 1994 increased $48.7 million or 8.5%. Retail
revenues increased approximately $53.6 million or 10.3% largely
due to a 8.3% increase in retail electric sales. This sales
increase is due mainly to warmer weather and sales growth in
1995. On a weather-adjusted basis, sales growth for the third
quarter of 1995 was 2.4% higher than 1994. Retail revenues were
impacted by increased cost recovery of conservation expenditures
(as discussed below). Wholesale revenues were impacted by the
effects of expected contract terminations for seven municipal
customers in July 1995, resulting in a $6.4 million decrease.
Gas revenues for the third quarter 1995 increased $3.9
million or 9.4% compared with the third quarter of 1994. Gas
revenues increased primarily due to a 10.2% increase in total gas sales
volume partially offset by a 1.2% average price decrease. The
sales volume increase is due primarily to higher interruptible
sales, which were up 23.5% in the third quarter of 1995. The
price decrease is primarily due to rate adjustments for decreased
purchased gas costs resulting from changes in natural gas supply
and demand market conditions.
Fuel for electric generation and Purchased and interchange
power combined for a net increase of $3.2 million or 2.0% for
the third quarter of 1995 compared with the third quarter of
1994. Purchased power expenses increased in 1995 primarily due to higher
contracted demand expense. The increased purchased power
expense was partially offset by lower fuel expense for the third
quarter of 1995. Fuel expense decreased mainly due to increased
use of lower cost nuclear generation in 1995, resulting from the
1994 Monticello coast-down for refueling.
Cost of gas purchased and transported for third quarter
1995 compared with third quarter 1994 increased $1.3 million or
5.3% primarily due to 10.0% higher gas sendout and increased bundled
sales, partly offset by lower per unit cost of purchased gas.
Other operation, Maintenance and Administrative and general
expenses together decreased $4.5 million or 2.7% compared with
the third quarter 1994. The lower costs are largely due to
decreased plant outage related expenses and employee benefit
costs in 1995.
Conservation and energy management increased $8.6 million
mainly due to higher amortization levels, consistent with cost
recovery under a new electric rate adjustment clause approved by
the Minnesota Public Utilities Commission (MPUC) effective May
1, 1995.
Depreciation and amortization increased $4.1 million or
6.0% compared with the third quarter of 1994. The increase is
mainly due to increased plant in service between the two
periods.
Property and general taxes for the third quarter 1995
compared with the third quarter of 1994 increased $3.9 million
or 6.5% due primarily to higher property tax rates in the state
of Minnesota and increased plant in service.
Utility income taxes for the third quarter 1995 compared
with the third quarter 1994 increased $13.4 million primarily
due to higher pretax operating income (after interest charges)
between the two periods.
Other income (expense)-net decreased mainly due to non-
regulated items discussed below. The portion related to utility
operations decreased $3.5 million in 1995, to a net expense of
$0.5 million, due mainly to lower interest income associated
with settlements of NSP federal income tax disputes.
Interest charges related to utility operations increased
$3.8 million to $29.4 million in 1995 largely due to long-term
debt issues, net of retirements, in 1995 and 1994, partially
offset by lower commercial paper levels in 1995.
Non-regulated Business Results
NSP's non-regulated operations include many diversified
businesses, such as independent power production, gas marketing,
industrial heating and cooling, and energy-related refuse-
derived fuel production. NSP also has investments in affordable
housing projects and several income-producing properties. The
following discusses NSP's diversified business results in the
aggregate.
Operating Revenues and Expenses - The net results of non-
regulated businesses are reported in Other income (expense)-net
on the Consolidated Statements of Income. Non-regulated
operating revenues decreased $1.4 million in 1995, to $63.3
million, largely due to decreased gas marketing sales by
Cenergy. Non-regulated operating expenses decreased $6.8
million in 1995 to $66.5 million primarily due to a $5.0 million write-
down of NRG's investment in a non-regulated energy project in
1994 and lower gas costs corresponding with Cenergy gas sales.
Non-Operating gain - In 1994, a Michigan cogeneration
project in which NRG was a 50-percent investor received a
payment as compensation for the termination of an energy
purchase agreement. Other income (expense)-net for the third
quarter of 1994 includes a pretax gain of $9.7 million for NRG's
share of the termination settlement, net of project investment
costs.
Equity Income - NSP has a less-than-majority equity
interest in several non-regulated projects. Consequently, a
large portion of NSP's non-regulated earnings is reported as
Equity in Earnings of Unconsolidated Investees on the
Consolidated Statements of Income. Equity income increased in
the third quarter of 1995 by $1.5 million before taxes primarily
due to higher earnings from NRG's international energy projects,
partially offset by lower earnings from the cogeneration
projects whose contracts were terminated in 1995 (as discussed
in Note 3 to the Financial Statements).
Interest Expense - Interest charges on the Consolidated
Statements of Income include interest expense related to non-
regulated businesses of $2.4 million in 1995 and $1.7 million in
1994. This increase is due mainly to long-term debt on new
affordable housing projects by Eloigne Company, a non-regulated
subsidiary of the Company.
Income Taxes - Other income (expense)-net reported on the
Consolidated Statements of Income includes income taxes related
to non-regulated businesses. Such income taxes for the third
quarter of 1995 were ($0.4) million, a $3.8 million decrease
over the third quarter of 1994. The decrease in 1995 is due
mainly to the tax effect of the 1994 gain from the cogeneration
contract termination discussed above. NSP's management intends
to reinvest the earnings of international operations
indefinitely. Accordingly, U.S. income taxes and foreign
withholding taxes have not been provided on the earnings of
international projects.
First Nine Months of 1995 Compared with First Nine Months of
1994
Utility Operating Results
Electric revenues for the first nine months of 1995
compared with the first nine months of 1994 increased $58.3
million or 3.7%. Retail revenues increased approximately $62.8
million or 4.4% largely due to electric retail sales growth of
3.9%. Warmer than normal summer weather in 1995 contributed to
sales growth compared with 1994, which had a cooler than normal
summer. On a weather-adjusted basis, retail sales growth for
the first nine months of 1995 was 2.4% higher than 1994. Also,
although retail revenues were impacted by increased cost
recovery of conservation expenditures (as discussed below), such
price increases were partly offset by rate adjustments for North
Dakota refunds (See Note 2 to Financial Statements) and lower
per unit power purchase costs and fossil fuel costs.
Gas revenues for the first nine months of 1995 decreased
$20.2 million or 6.7% compared with the first nine months of
1994. Gas revenues decreased primarily due to a 7.8% total average
price decrease partially offset by a 0.4% increase in gas sales volume.
The price decrease is primarily due to rate adjustments for decreased
purchased gas costs resulting from changes in natural gas supply and demand
market conditions.
Fuel for electric generation and Purchased and interchange
power combined for a net increase of $2.5 million or 0.6% for
the first nine months of 1995 compared with the first nine
months of 1994. Fuel expense for the first nine months of 1995
increased $2.0 million mainly as a result of increased sales due
to the impact of weather and electric sales growth, and higher
1995 generation levels as a result of scheduled plant
maintenance outages in 1994. Purchased power increased primarily due to
higher electric demand costs and wind energy purchases, partly
offset by lower cost of other energy purchases due to market
conditions.
Cost of gas purchased and transported for the first nine
months of 1995 compared with the first nine months of 1994
decreased $22.7 million or 12.0% primarily due to a 11.8% decline in the
per unit cost of purchased gas and a 0.2% decrease in gas
sendout. The lower cost of purchased gas reflects changes in
market conditions while the lower gas sendout reflects the
warmer than normal weather in early 1995 compared to colder than
normal weather in early 1994.
Other operation, Maintenance and Administrative and general
expenses together decreased $7.0 million or 1.4% compared with
the first nine months of 1994. The lower costs are largely due
to decreases in employee benefit costs.
Conservation and energy management increased $12.8 million
due mainly to higher amortization levels, consistent with cost
recovery under a new electric rate adjustment clause approved by
the MPUC effective May 1, 1995.
Depreciation and amortization increased $12.3 million or
6.0% compared with the first nine months of 1994. The increase
is mainly due to increased plant in service between the two
periods.
Property and general taxes for the first nine months of
1995 compared with the first nine months of 1994 increased $9.9
million or 5.5% due primarily to higher property tax rates in
the state of Minnesota and increased plant in service.
Utility income taxes for the first nine months of 1995
compared with the first nine months of 1994 increased $3.1
million primarily due to higher pretax operating income (after
interest charges) between the two periods.
Other income (expense)-net increased mainly due to non-
regulated business results discussed below. The portion related
to utility operations decreased $2.6 million to a net expense of
$2.0 million in the first nine months of 1995 compared with the
same period a year ago. This decrease reflects lower interest
income from settlements of NSP federal income tax disputes,
partly offset by costs incurred in 1994 for the Prairie Island
fuel storage issue.
Interest Charges related to utility operations increased
$16.3 million to $87.1 million in 1995 largely due to long-term
debt issues in 1995 and 1994 (net of retirements) and higher
short-term interest rates (which affect commercial paper
borrowings and variable rate long-term debt).
Non-regulated Business Results
Operating Revenues and Expenses - The net results of non-
regulated businesses are reported in Other income (expense)-net
on the Consolidated Statements of Income. Non-regulated
operating revenues increased $51.7 million in 1995, to $221.5
million, largely due to increased gas marketing sales by
Cenergy. Non-regulated operating expenses increased $56.3
million in 1995 to $228.9 million primarily due to higher gas costs
corresponding with Cenergy gas sales and fewer project
development costs being capitalized by NRG on pending projects
in 1995.
Equity Income - Equity income increased in the first nine
months of 1995 by $7.2 million before taxes primarily due to
higher earnings from NRG's international energy projects (one of
which did not provide earnings prior to the second quarter of
1994), partially offset by lower earnings from the cogeneration
projects whose contracts were terminated in 1995 (as discussed
below).
Non-Operating Gains - In June 1995, final regulatory
approvals were obtained for an agreement to terminate a power
sales contract between a California energy project in which NRG
is a 45% investor and an unrelated utility company (see Note 3
to the Financial Statements). Other income (expense)-net for
1995 includes a pretax gain of approximately $30 million for
NRG's share of the termination settlement. Also, as discussed
in the third quarter Non-regulated Business Results section,
Other income (expense)-net in 1994 includes a pretax gain of
approximately $9.7 million for NRG's share of another contract
termination settlement.
Interest Expense - Interest charges on the Consolidated
Statements of Income include interest expense related to non-
regulated businesses of $6.7 million in 1995 and $5.4 million in
1994. This increase is due mainly to long-term debt on new
affordable housing projects by Eloigne Company, a non-regulated
subsidiary of the Company.
Income Taxes - Income taxes related to non-regulated
businesses for the first nine months of 1995 were $12.4 million,
a $6.3 million increase over the first nine months of 1994. The
increase in 1995 is due mainly to higher pretax income from non-
regulated businesses, as discussed above.
Liquidity and Capital Resources
The Company had $139 million in commercial paper debt
outstanding as of September 30, 1995. The Company plans to keep
credit lines of at least 85% of the highest anticipated level of
commercial paper borrowings. Commercial banks currently provide
credit lines of approximately $286 million to the Company.
These credit lines make short-term financing available in the
form of bank loans and support for commercial paper sales. The
Company has regulatory approval for up to $446 million in short-
term borrowing levels.
Commercial banks currently provide credit lines of $12
million to wholly owned subsidiaries of the Company.
Approximately $11 million of those credit lines remained
available at September 30, 1995.
In January 1995, stock options for the purchase of 277,977
shares were awarded under the Company's Executive Long-Term
Incentive Award Stock Plan (the Plan). These options are not
exercisable for approximately twelve months after grant. As of
September 30, 1995, a total of 1,021,940 stock options were
outstanding, which were considered as potential common stock
equivalents for earnings per share purposes. During the first
nine months of 1995, the Company has issued 22,901 new shares of
common stock under the Plan pursuant to the exercise of options
and awards granted in prior years. Under NSP's Dividend
Reinvestment and Stock Purchase Plan, the Company has issued
358,115 shares of common stock during the first nine months of
1995. During 1995, the Company has issued an additional 132,040
shares of new common stock to the ESOP for dividends on Company
shares held. In addition, the Company issued common stock in
connection with a non-regulated business acquisition.
On March 29, 1995 the Company loaned $15 million to the
Employee Stock Ownership Plan (ESOP) for the financing of stock
purchases. The ESOP used the loan proceeds to purchase 342,368
newly issued shares of Company common stock. On April 3, 1995,
the Company borrowed $15 million in unsecured debt to finance
the ESOP loan on a long-term basis. The interest rate on the
unsecured debt of the Company is variable (6.18% for the period
July 20, 1995 through October 20, 1995), and is adjusted
quarterly based on changes in London Interbank Offered Rates
(LIBOR). The loan has a term of approximately seven years and
will be repaid in quarterly installments.
On July 7, 1995 the Company issued $250,000,000 of first
mortgage bonds due July 1, 2025 with an interest rate of 7 1/8%.
The proceeds from these bonds were added to the general funds of
the Company and applied to the redemption (on August 2, 1995) of
$98,000,000 in principal amount of its 9 1/8% First Mortgage
Bonds due July 1, 2019 at a redemption price of 106.388% and to
the redemption (on August 2, 1995) of $70,000,000 in principal
amount of its 9 3/8% First Mortgage Bond due June 1, 2020 at a
redemption price of 107.032%. The balance of the net proceeds
was used to repay short-term borrowings.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
As discussed in the Legal Proceedings section of Item 3 of
the Company's 1994 Annual Report on Form 10-K, on July 22, 1993,
a natural gas explosion occurred on the Company's distribution
system in St. Paul, MN. Sixteen lawsuits have been filed
against the Company in regard to the explosion, including one
suit with multiple plaintiffs. In April 1995 the National
Transportation Safety Board concluded the City of St. Paul
contractors were largely responsible for the natural gas
explosion. The report found little, if any, fault with the
actions taken by or conduct of the Company. A trial to decide
civil liability and the parties responsible for the explosion
has been scheduled for February 1997, with the damages portion
of the trial scheduled for six months thereafter.
As discussed in the Environmental Contingencies section of
Note 17 to the Company's financial statements in the 1994 Annual
Report of Form 10-K, the Environmental Protection Agency or
state environmental agencies have designated the Company as a
"potentially responsible party" (PRP) at several waste disposal
sites to which the Company allegedly sent hazardous materials.
In June 1995, the Company agreed to pay approximately $70,000 of
past expenses which the Minnesota Pollution Control Agency
incurred at one of these waste disposal sites, (the University
of Minnesota Rosemount Research Site) in order to resolve state
claims against the Company.
On August 9, 1995 the Company was designated as a
"potentially responsible party" at the Schnitzer Iron & Metal
Site (Site) in Ramsey County, Minnesota. Schnitzer Company
operated at the Site from approximately 1928 to 1983 as a scrap
metal recycling facility. As part of its recycling operations,
the Schnitzer Company operated metal shears and other equipment
which were used to reduce the size of scrap metal. Casings from
NSP transformers were allegedly included in the scrap metal and
in the handling of scrap transformers the Site was allegedly
contaminated by transformer oil containing polychlorinated
biphenyls (PCBs). In addition to PCB contamination, the Site is
also contaminated by lead. The cost to clean up the Site has
been estimated from $0.6 million to $4.0 million. In addition
to NSP, fifteen other parties have been identified as PRP's and
other parties have been identified as de minimis or de micromis
parties. The extent of NSP's liability, if any, and share of
any cost of clean up has not yet been determined.
On October 12, 1995, during operation of the Company's
Monticello nuclear generating plant, plant personnel found a
valve in a loop of the drywell spray system which was left out
of service from the previous year's outage. The issue was
reported to the United States Nuclear Regulatory Commission,
which is currently investigating this matter. The NRC will
likely issue an inspection report with a statement of an
"apparent violation" of NRC regulations in the next 30 days.
For a discussion of proceedings involving NSP's utility
rates, see Note 2 to these Financial Statements.
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of the Company was held
on September 13, 1995, for the purpose of voting on the matters
listed below. Proxies for the meeting were solicited pursuant
to Section 14(a) of the Securities Exchange Act of 1934, as
amended, and there was no solicitation in opposition to
management's solicitations. All of management's nominees for
directors as listed in the proxy statement were elected. The
matters before the meeting and the voting results were as
follows:
1. A proposal to approve the Amended and Restated Agreement and
Plan of Merger, dated as of April 28, 1995, as amended and
restated as of July 26, 1995 ("Merger Agreement"), among
NSP, Wisconsin Energy Corporation, a Wisconsin corporation
("WEC" and, after the effective time of the mergers
contemplated by the Merger Agreement, Primergy Corporation
("Primergy")), Northern Power Wisconsin Corp., a Wisconsin
corporation and a wholly owned subsidiary of NSP ("New NSP")
and WEC Sub Corp., a Wisconsin corporation and a wholly
owned subsidiary of WEC ("WEC Sub");
Shares
Voted For Voted Against Voted Abstain
49,837,850 1,381,074 589,243
2. A proposal to approve the Primergy Stock Incentive Plan;
Shares
Voted For Voted Against Voted Abstain
44,488,504 5,792,198 1,527,465
3. A proposal to approve the Primergy Management Incentive
Compensation Plan;
Shares
Voted For Voted Against Voted Abstain
43,100,532 6,795,108 1,912,528
4. A proposal to elect four directors to Class III to serve for
a term of three years until their successors are elected and
qualified;
Shares
Election of Directors Voted For Withheld Authority
H. Lyman Bretting 56,985,000 1,187,161
David A. Christensen 56,962,867 1,209,294
Allen F. Jacobson 56,879,340 1,292,821
Margaret R. Preska 56,831,990 1,340,171
5. A proposal to ratify the appointment of Price Waterhouse LLP
as independent accountants for NSP for 1995;
Shares
Voted For Voted Against Voted Abstain
56,806,595 659,454 706,110
6. A "Shareholder Resolution on Public Image"
Shares
Voted For Voted Against Voted Abstain
2,777,876 45,531,877 3,498,414
7. A "Shareholder Resolution on Regulatory Reform"
Shares
Voted For Voted Against Voted Abstain
2,730,343 46,499,783 2,578,041
The number of broker non-votes on all matters voted was
6,363,993.
Item 5. Other Information
MERGER AGREEMENT WITH WISCONSIN ENERGY CORPORATION
As previously reported in Northern States Power Company's
Current Report on Form 8-K, dated April 28, 1995 and filed on
May 3, 1995, and Quarterly Report on Form 10-Q for the quarters
ended March 31 and June 30, 1995, NSP, WEC, New NSP, and WEC
Sub, have entered into an Agreement and Plan of Merger (the
"Merger Agreement"), which provides for a strategic business
combination involving NSP and WEC in a "merger-of-equals"
transaction (the "Transaction"). The Transaction, which was ap-
proved by the shareholders of the constituent companies at
meetings held on September 13, 1995, is expected to close
shortly after all of the conditions to the consummation of the
Transaction, including obtaining applicable regulatory approv-
als, are met or waived. The regulatory approval process is
expected to take approximately 12 to 18 months from April 28,
1995.
In the Transaction, the holding company of the combined
enterprise will be registered under the Public Utility Holding
Company Act of 1935, as amended. The holding company will be
named Primergy Corporation ("Primergy") and will be the parent
company of both NSP (which, for regulatory reasons, will
reincorporate in Wisconsin) and of WEC's present principal
utility subsidiary, Wisconsin Electric Power Company ("WEPCO")
which will be renamed "Wisconsin Energy Company." It is
anticipated that, following the Transaction, NSP's Wisconsin
utility subsidiary, Northern States Power Company, a Wisconsin
corporation (NSP-W), will be merged into Wisconsin Energy
Company and that NSP's other subsidiaries will become
subsidiaries of Primergy.
As noted above, pursuant to the Transaction, NSP will
reincorporate in Wisconsin for regulatory reasons. This
reincorporation will be accomplished by the merger of NSP into
New NSP, with New NSP being the surviving corporation and
succeeding to the business of NSP as an operating public
utility. Following such merger, WEC Sub will be merged with and
into New NSP, with New NSP being the surviving corporation and
becoming a subsidiary of Primergy. Both New NSP and WEC Sub
were created to effect the Transaction and will not have any
significant operations, assets or liabilities prior to such
mergers. After the Transaction is completed, current common
stockholders of NSP will own shares of Primergy common stock,
and current bondholders and preferred stockholders of NSP will
become investors in New NSP.
SUMMARIZED PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The following summary of unaudited pro forma financial
information reflects the adjustment of the historical
consolidated balance sheets and statements of income of NSP and
WEC to give effect to the Transaction to form Primergy and a new
subsidiary structure. The unaudited pro forma balance sheet
information gives effect to the Transaction as if it had
occurred on that date. The unaudited pro forma income statement
information gives effect to the Transaction as if it had
occurred at the beginning of the periods presented. This pro
forma information was prepared from the historical consolidated
financial statements of NSP and WEC on the basis of accounting
for the Transaction as a pooling of interests and should be read
in conjunction with such historical consolidated financial
statements and related notes thereto of NSP and WEC. A $141
million pro forma adjustment has been made to conform the
presentations of noncurrent deferred income taxes in the
summarized pro forma combined balance sheet information as a net
liability. The pro forma combined earnings per common share
reflect pro forma adjustments to average common shares
outstanding in accordance with the stock conversion provisions
of the Merger Agreement. The following information is not
necessarily indicative of the financial position or operating
results that would have occurred had the Transaction been
consummated on the date, or at the beginning of the periods, for
which the Transaction is being given effect nor is it
necessarily indicative of future operating results or financial
position.
The summarized Primergy pro forma financial information
reflects the combination of the historical financial statements
of NSP and WEC after giving effect to the Transaction to form
Primergy.
The summarized New NSP pro forma financial information
reflects the adjustment of the historical financial statements
of NSP to give effect to the Transaction, including the
reincorporation of NSP in Wisconsin, the merger of NSP-W into
Wisconsin Energy Company, and the transfer of ownership of all
of the current NSP subsidiaries to Primergy.
PRIMERGY CORP:
Pro Forma
NSP WEC Combined
(in millions, except per share amounts)
As of September 30, 1995:
Utility Plant-Net $4,282 $2,879 $7,161
Current Assets 625 470 1,095
Other Assets 1,166 1,106 2,131
Total Assets $6,073 $4,455 $10,387
Common Stockholders' Equity $2,003 $1,838 $3,841
Preferred Stock and Premium 241 30 271
Long-Term Debt 1,545 1,250 2,795
Total Capitalization 3,789 3,118 6,907
Current Liabilities 858 455 1,313
Other Liabilities 1,426 882 2,167
Total Equity & Liabilities $6,073 $4,455 $10,387
For the Nine Months Ended
September 30, 1995:
Utility Operating Revenues $1,916 $1,303 $3,219
Utility Operating Income $267 $238 $505
Net Income, after Preferred
Dividend Requirements $207 $173 $380
Earnings per Common Share:
As reported $3.09 $1.57 --
NSP Equivalent Shares -- -- $2.82
Primergy Shares -- -- $1.74
NEW NSP:
Merger
Divestitures Pro Forma
NSP Net New NSP
(in millions)
As of September 30, 1995:
Utility Plant-Net $4,282 ($687) $3,595
Current Assets 625 (120) 505
Other Assets 1,166 (503) 663
Total Assets $6,073 ($1,310) $4,763
Common Stockholder's Equity $2,003 ($673) $1,330
Preferred Stock and Premium 241 -- 241
Long-Term Debt 1,545 (358) 1,187
Total Capitalization 3,789 (1,031) 2,758
Current Liabilities 858 (83) 775
Other Liabilities 1,426 (196) 1,230
Total Equity & Liabilities $6,073 ($1,310) $4,763
For the Nine Months Ended
September 30, 1995:
Utility Operating Revenues $1,916 ($150) $1,766
Utility Operating Income $267 ($41) $226
Net Income, after Preferred
Dividend Requirements $207 ($57) $150
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The following Exhibits are filed with this report:
27.01 Financial Data Schedule for the nine months ended
September 30, 1995.
The following Exhibits are incorporated herein by reference:
2.01 Amended and Restated Agreement and Plan of Merger,
dated as of April 28, 1995, as amended and restated
as of July 26, 1995, by and among Northern States
Power Company, Wisconsin Energy Corporation,
Northern Power Wisconsin Corp. and WEC Sub Corp.
(Exhibit (2)-1 to Northern Power Wisconsin Corporation's
Registration Statement on Form S-4 filed on August 7, 1995,
Registration No. 33-61619-01.)
(b) Reports on Form 8-K
The following reports on Form 8-K were filed either during
the three months ended September 30, 1995, or between September
30, 1995 and the date of this report:
September 1, 1995 (Filed September 13, 1995) - Item 5.
Other Events. Disclosure of an acquisition of Energy
Masters Corporation, a non-regulated company specializing
in energy efficiency improvement services, and disclosure
of the 1995 earnings outlook.
September 13, 1995 - Item 5. Other Events. Disclosure of
the shareholders vote approving the plan of merger between
NSP and WEC by both NSP and WEC shareholders.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
NORTHERN STATES POWER COMPANY
(Registrant)
(Roger D. Sandeen)
Roger D. Sandeen
Vice President, Controller and
Chief Information Officer
(Gary R. Johnson)
Gary R. Johnson
Vice President and General Counsel
Date: November 13, 1995
[ARTICLE] UT
[LEGEND]
This schedule contains summary financial information extracted from the
Consolidated Statements of Income, Consolidated Balance Sheets and Consolidated
Statements of Cash Flows and is qualified in its entirety by reference to such
financial statements.
[/LEGEND]
[MULTIPLIER] 1,000
<TABLE>
<S> <C>
[PERIOD-TYPE] 9-MOS
[FISCAL-YEAR-END] DEC-31-1994
[PERIOD-END] SEP-30-1995
[BOOK-VALUE] PER-BOOK
[TOTAL-NET-UTILITY-PLANT] 4,281,729
[OTHER-PROPERTY-AND-INVEST] 646,123
[TOTAL-CURRENT-ASSETS] 624,999
[TOTAL-DEFERRED-CHARGES] 378,638
[OTHER-ASSETS] 141,789
[TOTAL-ASSETS] 6,073,278
[COMMON] 169,759
[CAPITAL-SURPLUS-PAID-IN] 587,162
[RETAINED-EARNINGS] 1,255,785
[TOTAL-COMMON-STOCKHOLDERS-EQ] 2,003,144<F1>
[PREFERRED-MANDATORY] 0
[PREFERRED] 240,469
[LONG-TERM-DEBT-NET] 1,545,244
[SHORT-TERM-NOTES] 248
[LONG-TERM-NOTES-PAYABLE] 0
[COMMERCIAL-PAPER-OBLIGATIONS] 139,200
[LONG-TERM-DEBT-CURRENT-PORT] 167,917
[PREFERRED-STOCK-CURRENT] 0
[CAPITAL-LEASE-OBLIGATIONS] 0
[LEASES-CURRENT] 0
[OTHER-ITEMS-CAPITAL-AND-LIAB] 1,967,494<F1>
[TOT-CAPITALIZATION-AND-LIAB] 6,073,278
[GROSS-OPERATING-REVENUE] 1,915,816
[INCOME-TAX-EXPENSE] 124,621<F2>
[OTHER-OPERATING-EXPENSES] 1,536,840
[TOTAL-OPERATING-EXPENSES] 1,648,364
[OPERATING-INCOME-LOSS] 267,452
[OTHER-INCOME-NET] 56,273<F2>
[INCOME-BEFORE-INTEREST-EXPEN] 310,628
[TOTAL-INTEREST-EXPENSE] 93,824
[NET-INCOME] 216,804
[PREFERRED-STOCK-DIVIDENDS] 9,388
[EARNINGS-AVAILABLE-FOR-COMM] 207,416
[COMMON-STOCK-DIVIDENDS] 134,822
[TOTAL-INTEREST-ON-BONDS] 84,110
[CASH-FLOW-OPERATIONS] 483,207
[EPS-PRIMARY] $3.09
[EPS-DILUTED] 0
<FN>
<F1> $(9,562) thousand of Common Stockholders' Equity is classified as Other
Items-Capitalization and Liabilities. This represents the net of leveraged
common stock held by the Employee Stock Ownership Plan and the currency
translation adjustments.
<F2> $13.097 million of non-operating income taxes are classified as Income Tax
Expense. The financial statement presentation includes them as a component of
Other Income (expense) - Net.
</FN>
</TABLE>
