SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission file number: 1-3034
NORTHERN STATES POWER COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
NORTHERN STATES POWER COMPANY (the "Company")
414 NICOLLET MALL
MINNEAPOLIS, MINNESOTA 55401
NORTHERN STATES POWER COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
ASSETS: December 30, 1995 December 30, 1994
Total noninterest-bearing cash $ (1,324) $ -
Receivables:
Participant contributions 2,733 2,813
Dividends and interest 3,838,924 3,571,872
Total 3,840,333 3,574,685
General Investments:
Interest-bearing cash (including
money market funds) 15,093 3,843
Employer-related investments:
Investment in Northern States Power Company
Common Stock 282,600,454 238,123,512
TOTAL ASSETS 286,455,880 241,702,040
LIABILITIES:
Loans and interest payable to Northern
States Power Company 9,999,929 2,729,681
TOTAL LIABILITIES 9,999,929 2,729,681
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $ 276,455,951 $ 238,972,359
See accompanying notes to financial statements.
NORTHERN STATES POWER COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended
INCOME: December 30, 1995
Contributions:
Employers $ 5,061,600
Participants 45,951
Total Contributions 5,107,551
Earnings on investments:
Interest-bearing cash (including money market funds) 10,164
Dividends:
Common stock 15,180,693
Net gain (loss) on sale of assets:
Aggregate proceeds 11,615,010
Aggregate carrying amount 7,398,856
Total net gain (loss) on sale of assets 4,216,154
Unrealized appreciation (depreciation) of assets 25,183,703
TOTAL INCOME 49,698,265
EXPENSES:
Benefit payment and payments to provide benefits:
Directly to participants or beneficiaries 11,606,772
Interest expense 599,528
Other 8,373
TOTAL EXPENSES 12,214,673
NET INCREASE 37,483,592
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 238,972,359
End of year $276,455,951
See accompanying notes to financial statements.
NORTHERN STATES POWER COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
(EIN: 41-0448030 PN: 002)
NOTES TO FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Investments - Substantially all investments of the Northern
States Power Company Employee Stock Ownership Plan (the
"Plan") consist of common stock of Northern States Power
Company (Minnesota) (the "Company") and are carried at
market. The Plan recognizes unrealized appreciation or
depreciation in the market value of Company shares which is
determined using the year-end closing market price.
Realized appreciation or depreciation is recognized by the
Plan upon distribution of individual account balances to
participants or beneficiaries. The cost of stock
distributed is determined on the average cost basis.
Use of Estimates - In recording transactions and balances
resulting from Plan activity, the Plan uses estimates based
on the best information available. Estimates are used for
such items as interest and dividends receivable. As better
information becomes available (or actual amounts are
determinable), the recorded estimates are revised.
Consequently, Plan operating results can be affected by
revisions to prior estimates.
Other - The Plan follows the accrual basis of accounting.
Most administrative expenses of the Plan are paid by the
Company or its subsidiaries, except that terminating
participants who at their election desire an early and
additional distribution of their accounts are charged a fee
by the Company to partially offset the added administrative
cost for two distributions.
2. Plan Description
The following brief description of the Plan is provided for
general informational purposes only. Participants should
refer to the Plan document for more complete information.
General - The Plan is a defined contribution employee
benefit plan which provides eligible employees of the
Company and its participating subsidiaries (collectively
the "Companies") with the opportunity to acquire ownership
of common stock of the Company, without reduction in pay or
other benefits. Eligible participants may purchase
additional Company common stock under the Plan by making
after-tax contributions. The Plan covers substantially all
of the employees of the Companies.
Funding - Assets of the Plan are maintained in a trust.
The Companies can make contributions to the Plan at their
discretion. Generally, Company contributions are made to
the extent that tax savings are realized by the Companies
as a result of the use of the dividends received by the
Plan to repay the loan, as discussed below. Shares
purchased with the Companies' contributions are allocated
to the eligible active participants' accounts in the
proportion that the participants' covered compensation
bears to the covered compensation of all eligible
participants, excluding compensation in excess of $150,000,
as required by the Internal Revenue Code. The Plan also
provides for savings contributions to be made by eligible
employees through payroll deductions which are not matched
by the Companies under current Plan provisions.
Benefits - Each participant is fully vested (that is, has
a right which cannot be lost) in all of the common stock
allocated to the participant's account. Participant
accounts can be distributed to participants in the plan
year following retirement or other termination of
employment with the Companies. Qualifying participants may
accelerate or delay distribution after termination of
employment. The Plan also permits limited in-service
withdrawals of amounts attributable to employee
contributions, but some withdrawals are available only to
satisfy qualifying hardships, and some amounts may be
withdrawn only after a seven-year holding period.
Loans - The Plan is designed so that loans may be taken out
by the Plan and the proceeds used to purchase shares of
Company common stock. (See Note 6 for further discussion of
Plan loans.) Dividends received for unallocated shares and
for certain shares allocated to active participants are
used to repay the loan. As the dividends for shares
allocated to participant accounts are applied to the loan,
the shares purchased with the loan proceeds are allocated
to the individual accounts of the active participants as
though the dividends were used to purchase stock on the
open market, but at the price per share of the shares
acquired with the loan proceeds, if that price is lower
than the market price. Dividends are applied to loan
repayments before any contributions by the Companies are
applied.
Plan Amendments & Termination - The Plan was adopted in
1975 and the amendment permitting employees to make
voluntary contributions to the Plan was adopted in 1977.
Various other amendments to the Plan have been made,
including an amendment adopted in 1991 authorizing the Plan
to acquire stock directly from the Company. The Plan was
restated on December 15, 1994 to comply with changes in
legal requirements for such plans, as well as making
several other changes. There is no specified term for the
Plan but the employer may terminate the Plan at any time in
accordance with the provisions of ERISA.
3. Federal Income Tax
The Plan has been determined by the Internal Revenue
Service to be a qualified plan under Section 401(a) of the
Internal Revenue Code (the Code). As a result, any income
earned by the Plan is exempt from federal income tax. The
Company believes that the Plan is currently designed and
being operated in compliance with the applicable
requirements of the Code to maintain compliance with
Section 401(a). Based on amendments to the Plan made in
the 1993 plan year, the Company requested the Internal
Revenue Service determine that the Plan as amended
continues to qualify under Section 401(a). In September
1995, the Company received a favorable determination letter
from the IRS reaffirming the Plan's status as a qualified
plan under section 401(a) of the Code.
As long as the Plan remains a qualified plan, participants
are not subject to income tax on amounts contributed by the
Companies or any income received by the Plan until a
distribution is received from the Plan. Participants may
not claim a deduction on their Federal income tax return
for any employee contributions. Distributions in excess of
the participant's contributions will usually be taxed as
ordinary income. However, if common stock is distributed,
the portion of the value representing unrealized
appreciation while held in the Plan, may not, under certain
circumstances, be subject to immediate tax. Participants
of age 50 or older as of January 1, 1986 may elect 10-year
averaging at pre-1987 income tax rates or 5-year averaging
at current rates. Other participants may elect a one time
only 5-year averaging option for lump sum distributions
received after the participant attains age 59 1/2.
4. Changes In Unrealized Appreciation (Depreciation)
Of Company Common Stock
Unrealized
Appreciation
Market Value* Cost (Depreciation)
Balance, December
30, 1994 $238 123 512 $153 848 648 $ 84 274 864
Net Change 44 476 942 19 293 239 25 183 703
Balance, December
30, 1995 $282 600 454 $173 141 887 $109 458 567
*The market value at December 30, 1995 and 1994 was $49 1/8 and
$44 per share, respectively.
5. Allocation of Plan Investments
The Plan's cash investments are not allocated to
participants. The Plan's investments in Company common
stock were allocated to participants' accounts at December
30, 1995 and 1994 as follows:
1995 1994
Allocated Unallocated Allocated Unallocated
Number
of
Shares 5 407 993 344 688 5 215 942 195 956
Market
Value $265 667 656 $16 932 798 $229 501 448 $8 622 064
Cost $157 919 161 $15 222 725 $145 313 912 $8 534 736
6. Related Party Transactions
Transactions with the Company - Income from common stock
dividends relate to Company shares held by the Plan.
Income receivables include dividends on Company stock
payable to the Plan of $3,838,799 and $3,571,853 at
December 30, 1995 and 1994, respectively. Employer
contributions for the 1994 plan year were based on tax
savings realized by the Company.
Loan Payable - In March 1995, the Plan entered into a
$15,000,000 term loan agreement with the Company as
permitted by the Trust Agreement between the Trustee and
the Company. The proceeds of the loan were used to
purchase the Company's common stock. In April 1995, the
Company borrowed $15,000,000 in unsecured debt to finance
the Plan loan on a long-term basis. The agreement with the
Company provides for the Plan's loan to be repaid in
quarterly installments over approximately seven years.
Loan payments in the amount of $7,823,247 and $8,189,809
were made during the years ended December 30, 1995 and
1994, respectively. The loan bears interest at a variable
rate which is adjusted quarterly, based on changes in
London Interbank Offered Rates (LIBOR). At December 30,
1995 the loan interest rate was 6.4%.
7. Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available
for benefits per the financial statements to the Plan's
Form 5500 report filed with the Department of Labor (Form
5500):
December 30,
1995 1994
Net assets available
for benefits per the
financial statements $276 455 951 $238 972 359
Benefits payable to
withdrawing participants (1 867 929) (0)
Net assets available
for benefits per the
Form 5500 $274 588 022 $238 972 359
The following is a reconciliation of benefit expenses per
the financial statements to Form 5500:
Year Ended
December 30, 1995
Benefit expenses per the
financial statements $11 606 772
Add: Benefits payable to
withdrawing participants at
December 30, 1995 1 867 929
Less: Benefits payable to
withdrawing participants at
December 30, 1994 (0)
Benefits paid to participants
per Form 5500 $13 474 701
As required by the Department of Labor's rules and
regulations for reporting and disclosure under the Employee
Retirement Income Security Act of 1974, on Form 5500 the
net asset amounts allocable to withdrawing participants are
recorded as a liability based on benefit claims that have
been processed and approved for payment prior to December
30 but have not yet been paid as of that date. As required
by generally accepted accounting principles, on the
accompanying financial statements such amounts are recorded
as paid.
Item 27a - Schedule of Assets held for Investment Purposes at
December 30, 1995
IDENTITY DESCRIPTION CURRENT
OF ISSUE OF INVESTMENT COST VALUE
*Northern Common Stock - $173 141 926 $282 600 454
States Par $2.50
Power
Company
*Known to be a party-in-interest to the Plan.
Item 27d - Schedule of Reportable Transactions
(a) (b) (c) (d) (h)
Identity of Description Purchase Selling Current
Party Involved of Transaction Price Price Value
Single Transactions
Northern States Seven year variable
Power Company * rate loan to the
Plan for the
purchase of Common
Stock. $15,000,000
Northern States Purchase of Common
Power Company * Stock by the Plan $15,000,000
Series of Transactions - Security of the Same Issue
Northern States Purchases and Sales
Power Company of Northern States
Stock * Power Company Common
Stock by the Plan $26,692,096 $8,239
First Bank, N.A. * Purchases and Sales
First American
Institutional
Money Fund $22,592,943 $22,581,693
Series of Transactions - Same Person
Northern States Northern States Power
Power Company * Co. Common Stock
Dividends, Employer
Contribution, and
Purchase of Common
Stock from Northern
States Power Company $44,040,290
*Known to be a party in interest.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator
of the Northern States Power Company
Employee Stock Ownership Plan
In our opinion, the accompanying statement of net assets
available for benefits and the related statement of changes in
net assets available for benefits present fairly, in all
material respects, the net assets available for benefits of the
Northern States Power Company Employee Stock Ownership Plan (the
Plan) at December 30, 1995 and 1994, and the changes in its net
assets available for benefits for the year ended December 30,
1995, in conformity with generally accepted accounting
principles. These financial statements are the responsibility
of the Plan's management; our responsibility is to express an
opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed
above.
Our audits were performed for the purpose of forming an opinion on
the basic financial statements taken as a whole. The additional
information provided in Items 27a and 27d is presented for the
purpose of additional analysis and is not a required part of the
basic financial statements but is supplementary information
required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental items have been
subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/
Price Waterhouse LLP
Minneapolis, Minnesota
June 25, 1996
Signature
As permitted under Form 11-K rules, the Company's Employee Stock
Ownership Plan is filing plan financial statements and schedules
prepared in accordance with the financial reporting requirements
of ERISA.
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the Company's Plan Administrator has duly caused this
annual report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Northern States Power Company
Employee Stock Ownership Plan
(Registrant)
By /s/
E J McIntyre
Vice President and Chief Financial
Officer
Northern States Power Company
June 27, 1996
EXHIBIT INDEX
Method of Exhibit
Filing No. Description
DT 23.01 Consent of Independent Accountants
DT = Filed electronically with this direct transmission.
Exhibit 23.01
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statement No. 2-61264 of Northern States Power Company on Form
S-8 of our report dated June 25, 1996 appearing on page 9 of the
Northern States Power Company Employee Stock Ownership Plan's
Annual Report on Form 11-K for the year ended December 30, 1995.
/s/
Price Waterhouse LLP
Minneapolis, Minnesota
June 27, 1996
