SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 27, 1995
Northern States Power Company
(Exact name of registrant as specified in its charter)
Minnesota
(State or other jurisdiction of incorporation)
1-3034 41-0448030
(Commission File Number) (IRS Employer Identification No.)
414 Nicollet Mall, Mpls, MN 55401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 612-330-5500
(Former name of former address, if changed since last report)
Item 7 Financial Statements and Exhibits
Merger Agreement with Wisconsin Energy Corporation
As previously reported in Northern States Power Company's Current Report
on Form 8-K, dated as of April 28, 1995 which was filed on May 3, 1995, and
Quarterly Report on Form 10-Q for the quarter ended March 31, 1995, Northern
States Power Company, a Minnesota corporation ("NSP"), Wisconsin Energy
Corporation, a Wisconsin corporation ("WEC"), Northern Power Wisconsin Corp.,
a Wisconsin corporation and wholly owned subsidiary of NSP ("New NSP") and WEC
Sub Corp., a Wisconsin corporation and wholly owned subsidiary of WEC ("WEC
Sub"), have entered into an Agreement and Plan of Merger, dated as of April
28, 1995 (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 unanimously approved by the Boards
of Directors of the constituent companies, is expected to close shortly after
all of the conditions to the consummation of the Transaction, including
obtaining applicable regulatory approvals, are met or waived. The regulatory
approval process is expected to take approximately 12 to 18 months.
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, 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.
Unaudited Pro Forma Condensed Financial Information
The following unaudited pro forma financial information presents the
historical consolidated balance sheets, statements of income and ratios of
earnings to fixed charges of NSP after giving effect to the Transaction which
would result in the formation of New NSP. The unaudited pro forma condensed
balance sheet at March 31, 1995 gives effect to the Transaction as if it had
occurred at March 31, 1995. The unaudited pro forma condensed statements of
income for each of the years in the three-year period ended December 31, 1994,
and the three months ended March 31, 1995 and 1994, give effect to the
Transaction as if it had occurred at January 1, 1992. The unaudited pro forma
ratios of earnings to fixed charges for each of the years in the three-year
period ended December 31, 1994, and the twelve months ended March 31, 1995,
give effect to the Transaction as if it had occurred at January 1, 1992.
These statements and ratios are prepared on the basis of accounting for the
Transaction as a pooling of interests and are based on the assumptions set
forth in the notes thereto.
The following pro forma financial information has been prepared from,
and should be read in conjunction with, the historical consolidated financial
statements and related notes thereto of NSP. 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.
NEW NSP
UNAUDITED PRO FORMA RATIO OF EARNINGS TO FIXED CHARGES
Twelve Months
Ended Year Ended December 31,
March 31, 1995 1994 1993 1992
Unaudited Pro Forma Ratio of
Earnings to Fixed Charges 4.0 4.2 4.0 3.1
For purposes of computing the ratio of earnings to fixed charges, (i)
earnings consist of income before accounting change plus fixed charges, federal
and state income taxes, deferred income taxes, and investment tax credits;
and less undistributed equity in earnings of unconsolidated investees; and
(ii) fixed charges consist of interest on long-term debt, other interest
charges, the interest component on leases and amortization of debt discount,
premium and expense.
See Notes to Unaudited Pro Forma Condensed Financial Statements for a
description of the assumptions used to prepare the unaudited pro forma ratios
of earnings to fixed charges.
NEW NSP
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
MARCH 31, 1995
(In thousands)
<TABLE>
<CAPTION>
NSP Pro Forma Pro Forma
(As Reported) Adjustments New NSP
<S> <C> <C> <C>
ASSETS
UTILITY PLANT
Electric $6,407,107 ($839,032) $5,568,075
Gas 679,587 (201,541) 478,046
Other 271,924 (55,943) 215,981
Total 7,358,618 (1,096,516) 6,262,102
Accumulated provision for depreciation (3,189,171) 422,766 (2,766,405)
Nuclear fuel - net 90,795 0 90,795
Net utility plant 4,260,242 (673,750) 3,586,492
CURRENT ASSETS
Cash and cash equivalents 36,525 (22,798) 13,727
Accounts receivable - net 290,284 (60,371) 229,913
Accrued utility revenues 81,999 (13,448) 68,551
Fossil fuel inventories 46,229 (3,200) 43,029
Material & supplies inventories 104,739 (8,803) 95,936
Prepayments and other 50,754 (22,870) 27,884
Total current assets 610,530 (131,490) 479,040
OTHER ASSETS
Regulatory assets 351,729 (34,023) 317,706
External decommissioning fund 160,731 0 160,731
Investments in non-regulated projects and
other investments 220,080 (199,726) 20,354
Non-regulated property - net 175,654 (147,844) 27,810
Intangible assets and other 135,410 (58,656) 76,754
Total other assets 1,043,604 (440,249) 603,355
TOTAL ASSETS $5,914,376 ($1,245,489) $4,668,887
LIABILITIES AND EQUITY
CAPITALIZATION
Common stock $168,186 ($168,186) $0
Other stockholders' equity 1,751,891 (453,886) 1,298,005
Total common stock equity 1,920,077 (622,072) 1,298,005
Cumulative preferred stock and premium 240,469 0 240,469
Long-term debt 1,456,217 (352,955) 1,103,262
Total capitalization 3,616,763 (975,027) 2,641,736
CURRENT LIABILITIES
Current portion of long-term debt 160,606 (6,580) 154,026
Short-term debt 157,648 (17,949) 139,699
Accounts payable 179,279 (29,494) 149,785
Taxes accrued 256,616 (11,183) 245,433
Other accrued liabilities 139,255 (17,762) 121,493
Total current liabilities 893,404 (82,968) 810,436
OTHER LIABILITIES
Deferred income taxes 850,823 (117,556) 733,267
Deferred investment tax credits 171,544 (24,381) 147,163
Regulatory liabilities 208,329 (17,256) 191,073
Other liabilities and deferred credits 173,513 (28,301) 145,212
Total other liabilities 1,404,209 (187,494) 1,216,715
TOTAL LIABILITIES AND EQUITY $5,914,376 ($1,245,489) $4,668,887
See accompanying notes to unaudited pro forma condensed financial statements.
</TABLE>
NEW NSP
UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, 1995
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
NSP Pro Forma Pro Forma
(As Reported) Adjustments New NSP
<S> <C> <C> <C>
Utility Operating Revenues
Electric $497,314 ($32,438) $464,876
Gas 163,853 (35,096) 128,757
Total Operating Revenues 661,167 (67,534) 593,633
Utility Operating Expenses
Electric Production-Fuel and Purchased Power 135,071 10,422 145,493
Cost of Gas Sold & Transported 99,301 (17,352) 81,949
Other Operation 130,627 (12,760) 117,867
Maintenance 37,767 (4,172) 33,595
Depreciation and Amortization 71,831 (8,403) 63,428
Taxes Other Than Income Taxes 62,279 (4,023) 58,256
Income Taxes 36,593 (10,655) 25,938
Total Operating Expenses 573,469 (46,943) 526,526
Utility Operating Income 87,698 (20,591) 67,107
Other Income (Expense)
Equity Earnings of Unconsolidated Investees 10,506 (10,506) 0
Other Income and Deductions - Net 761 114 875
Total Other Income (Expense) 11,267 (10,392) 875
Income before Interest Charges 98,965 (30,983) 67,982
Interest Charges 30,775 (7,423) 23,352
Net Income 68,190 (23,560) 44,630
Preferred Dividends 3,201 0 3,201
Earnings Available for Common Stockholders $64,989 ($23,560) $41,429
See accompanying notes to unaudited pro forma condensed financial statements.
</TABLE>
NEW NSP
UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, 1994
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
NSP Pro Forma Pro Forma
(As Reported) Adjustments New NSP
<S> <C> <C> <C>
Utility Operating Revenues
Electric $494,031 ($34,989) $459,042
Gas 189,431 (37,580) 151,851
Total Operating Revenues 683,462 (72,569) 610,893
Utility Operating Expenses
Electric Production-Fuel and Purchased Power 132,471 10,417 142,888
Cost of Gas Sold & Transported 121,805 (19,760) 102,045
Other Operation 133,487 (11,669) 121,818
Maintenance 40,469 (4,456) 36,013
Depreciation and Amortization 67,345 (7,784) 59,561
Taxes Other Than Income Taxes 59,929 (3,928) 56,001
Income Taxes 42,161 (12,223) 29,938
Total Operating Expenses 597,667 (49,403) 548,264
Utility Operating Income 85,795 (23,166) 62,629
Other Income (Expense)
Equity Earnings of Unconsolidated Investees (107) 107 0
Other Income and Deductions - Net 4,474 (3,118) 1,356
Total Other Income (Expense) 4,367 (3,011) 1,356
Income before Interest Charges 90,162 (26,177) 63,985
Interest Charges 24,368 (6,453) 17,915
Net Income 65,794 (19,724) 46,070
Preferred Dividends 3,057 0 3,057
Earnings Available for Common Stockholders $62,737 ($19,724) $43,013
See accompanying notes to unaudited pro forma condensed financial statements.
</TABLE>
NEW NSP
UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1994
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
NSP Pro Forma Pro Forma
(As Reported) Adjustments New NSP
<S> <C> <C> <C>
Utility Operating Revenues
Electric $2,066,644 ($114,385) $1,952,259
Gas 419,903 (89,200) 330,703
Total Operating Revenues 2,486,547 (203,585) 2,282,962
Utility Operating Expenses
Electric Production-Fuel and Purchased Power 570,880 43,551 614,431
Cost of Gas Sold & Transported 263,443 (50,542) 212,901
Other Operation 536,168 (47,075) 489,093
Maintenance 170,145 (23,729) 146,416
Depreciation and Amortization 273,801 (31,790) 242,011
Taxes Other Than Income Taxes 234,564 (15,615) 218,949
Income Taxes 129,228 (20,123) 109,105
Total Operating Expenses 2,178,229 (145,323) 2,032,906
Utility Operating Income 308,318 (58,262) 250,056
Other Income (Expense)
Equity Earnings of Unconsolidated Investees 35,863 (35,863) 0
Other Income and Deductions - Net 6,509 (3,731) 2,778
Total Other Income (Expense) 42,372 (39,594) 2,778
Income before Interest Charges 350,690 (97,856) 252,834
Interest Charges 107,215 (27,403) 79,812
Net Income 243,475 (70,453) 173,022
Preferred Dividends 12,364 0 12,364
Earnings Available for Common Stockholders $231,111 ($70,453) $160,658
See accompanying notes to unaudited pro forma condensed financial statements.
</TABLE>
NEW NSP
UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1993
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
NSP Pro Forma Pro Forma
(As Reported) Adjustments New NSP
<S> <C> <C> <C>
Utility Operating Revenues
Electric $1,974,916 ($115,081) $1,859,835
Gas 429,076 (81,455) 347,621
Total Operating Revenues 2,403,992 (196,536) 2,207,456
Utility Operating Expenses
Electric Production-Fuel and Purchased Power 524,126 43,662 567,788
Cost of Gas Sold & Transported 282,028 (51,178) 230,850
Other Operation 516,568 (42,540) 474,028
Maintenance 161,413 (22,566) 138,847
Depreciation and Amortization 264,517 (29,187) 235,330
Taxes Other Than Income Taxes 223,108 (14,163) 208,945
Income Taxes 128,346 (24,101) 104,245
Total Operating Expenses 2,100,106 (140,073) 1,960,033
Utility Operating Income 303,886 (56,463) 247,423
Other Income (Expense)
Equity Earnings of Unconsolidated Investees 3,030 (3,030) 0
Other Income and Deductions - Net 12,916 (1,326) 11,590
Total Other Income (Expense) 15,946 (4,356) 11,590
Income before Interest Charges 319,832 (60,819) 259,013
Interest Charges 108,092 (20,983) 87,109
Net Income 211,740 (39,836) 171,904
Preferred Dividends 14,580 0 14,580
Earnings Available for Common Stockholders $197,160 ($39,836) $157,324
See accompanying notes to unaudited pro forma condensed financial statements.
</TABLE>
NEW NSP
UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1992
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
NSP Pro Forma Pro Forma
(As Reported) Adjustments New NSP
<S> <C> <C> <C>
Utility Operating Revenues
Electric $1,823,316 ($107,071) $1,716,245
Gas 336,206 (60,802) 275,404
Total Operating Revenues 2,159,522 (167,873) 1,991,649
Utility Operating Expenses
Electric Production-Fuel and Purchased Power 451,696 44,186 495,882
Cost of Gas Sold & Transported 220,370 (41,540) 178,830
Other Operation 512,833 (33,677) 479,156
Maintenance 180,585 (21,818) 158,767
Depreciation and Amortization 242,914 (26,832) 216,082
Taxes Other Than Income Taxes 204,439 (12,925) 191,514
Income Taxes 90,669 (22,184) 68,485
Total Operating Expenses 1,903,506 (114,790) 1,788,716
Utility Operating Income 256,016 (53,083) 202,933
Other Income (Expense)
Equity Earnings of Unconsolidated Investees 2,382 (2,382) 0
Other Income and Deductions - Net 5,570 4,455 10,025
Total Other Income (Expense) 7,952 2,073 10,025
Income before Interest Charges 263,968 (51,010) 212,958
Interest Charges 103,040 (17,646) 85,394
Income Before Accounting Change 160,928 (33,364) 127,564
Preferred Dividends 16,172 0 16,172
Earnings Available for Common Stockholders $144,756 ($33,364) $111,392
See accompanying notes to unaudited pro forma condensed financial statements.
</TABLE>
NEW NSP
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
1. The pro forma balance sheet has been adjusted to reflect the
cancellation of NSP common stock with a $2.50 par value and its
replacement with no par common stock of New NSP which will be issued
to Primergy.
2. Subsidiary assets, liabilities, equity and results of operations have
been eliminated from consolidated NSP amounts to reflect the transfer
of ownership and control of all subsidiaries from NSP to Primergy. The
New NSP stock issued to Primergy is assumed to reflect the reduction in
net assets related to the transfer of investments in subsidiaries from
NSP to Primergy.
3. NSP financing of subsidiary capital and cash flow requirements has been
adjusted to reflect the transfer of such items to Primergy. Pro forma
adjustments reflect the elimination of (a) notes receivable and advances
from subsidiaries; (b) NSP debt incurred to finance the notes and
advances; (c) interest income earned on the notes and advances; and (d)
interest expense accrued on the debt incurred to finance the notes and
advances.
4. After the Transaction, NSP will not retain ownership of subsidiaries
currently being consolidated. Consequently, intercompany transactions
between NSP and its current subsidiaries have not been eliminated in the
pro forma financial statements.
The most significant intercompany transactions are power sales to and
purchases from NSP's Wisconsin subsidiary pursuant to an interchange
agreement with NSP. The interchange pricing and cost sharing
arrangements are expected to be restructured as a result of the
Transaction. However, at this time the amount of any changes to
interchange power purchases or sales cannot be estimated. Consequently,
no pro forma adjustments have been made to operating revenues, operating
expenses, or accounts receivable from (or payable to) associated
companies for the effects of interchange restructuring.
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 hereunto duly authorized.
Northern States Power Company
(a Minnesota Corporation)
By (Edward J. McIntyre)
Edward J. McIntyre
Vice President & Chief Financial
Officer
Dated: June 27, 1995
