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) December 31, 1996
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 or former address, if changed since last report)
Item 5. Other Events
On December 31, 1996, the collective bargaining agreements between Northern
States Power Company, a Minnesota corporation (NSP) and represented NSP
employees expired. However, NSP and representatives of the five unions who
represent NSP's employees have agreed to extend the terms of the expired
agreements to February 28, 1997, pending negotiations for new collective
bargaining agreements.
On January 22, 1997, NSP announced its financial results for the year 1996.
Attached as Exhibit 99.01 are the text portions of NSP's communication of
consolidated financial results for the fourth quarter and year ended December
31, 1996.
Item 7. Financial Statements and Exhibits
(c) EXHIBITS
Exhibit
No. Description
99.01 Portions of Investor Relations Release - Fourth Quarter and
Year-End 1996 Financial Results
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 /s/
Edward J. McIntyre
Vice President and Chief
Financial Officer
Dated: January 24, 1997
EXHIBIT INDEX
Method of Exhibit
Filing No. Description
DT 99.01 Portions of Investor Relations
Release - Fourth Quarter and
Year-End 1996 Financial
Results
DT = Filed electronically with this direct transmission.
EXHIBIT 99.01
January 22, 1997
INVESTOR RELATIONS RELEASE
NSP REPORTS 1996 INCREASED EARNINGS
FROM ONGOING OPERATIONS
MINNEAPOLIS - Northern States Power Co.'s (NSP) earnings from ongoing
operations were $3.82 per share in 1996, compared with $3.69 (excluding non-
recurring transactions) in 1995, an increase of four percent. Total earnings
per share were $3.82 in 1996, compared with $3.91, which included net non-
recurring income of 22 cents per share in 1995. Earnings from ongoing
operations increased for the fourth consecutive year in 1996. Net income for
the year ended Dec. 31, 1996, was $274.5 million, compared with 1995 results
of $275.8 million, which include non-recurring items of $14.7 million.
"These results reflect our commitment to achieve annual earnings per
share growth of five percent on average," said James J. Howard, NSP chairman,
president and CEO. "NRG Energy, Inc., our largest non-regulated subsidiary,
added a number of projects to its portfolio in 1996 and increased its
contribution to ongoing earnings by five cents per share. NRG's goal is to
contribute at least 20 percent of NSP's earnings by the year 2000." Since
1993, NSP's earnings per share from ongoing operations have increased by an
average of 8 percent per year.
Earnings from ongoing operations were higher in 1996 primarily due to
growth in electric and gas sales and reduced administrative costs. Partially
offsetting these earnings increases were the effects of less favorable
weather, higher utility operating and depreciation expenses, and dilutive
effects of stock issuances. In addition, the price volatility for natural gas
supply had an adverse impact on financial results for Cenerprise, NSP's non-
regulated energy service business.
Fourth quarter 1996 earnings per share were $1.11, compared with 82 cents
for the same period in 1995. Net income for the fourth quarter was $79.7
million, compared with $59.0 million for the same period in 1995.
###
For additional information contact:
E J McIntyre Vice President & Chief Financial Officer612/330-7712
R J Kolkmann Director, Investor Relations 612/330-6622
This information is not given in connection with any
sale or offer for sale or offer to buy any security.
<PAGE>
<TABLE>
NORTHERN STATES POWER COMPANY
A Consolidated Statement of
Northern States Power Company (Minnesota) and Subsidiaries
STATEMENTS OF INCOME (Unaudited)
<CAPTION>
3 Months 12 Months
Ended December 31 Ended December 31
1996 1995 Change 1996 1995 Change
(Millions of Dollars)
<S> <C> <C> <C> <C> <C> <C>
Utility operating revenues
Electric..........................................$521.7 $506.6 $15.1 $2,127.4 $2,142.8 ($15.4)
Gas............................................... 188.3 146.2 42.1 526.8 425.8 101.0
Total .......................................... 710.0 652.8 57.2 2,654.2 2,568.6 85.6
Utility operating expenses
Fuel for electric generation...................... 80.9 74.7 6.2 301.2 325.7 (24.5)
Purchased and interchange power................... 49.5 50.0 (0.5) 240.1 244.6 (4.5)
Cost of gas purchased and transported............. 128.4 90.8 37.6 335.5 256.7 78.8
Other operation................................... 90.4 84.5 5.9 336.5 321.1 15.4
Maintenance....................................... 35.0 39.0 (4.0) 155.8 158.2 (2.4)
Administrative and general........................ 32.1 57.4 (25.3) 148.7 186.2 (37.5)
Conservation and energy management................ 22.6 17.4 5.2 69.8 53.5 16.3
Depreciation and amortization..................... 78.8 73.5 5.3 306.4 290.1 16.3
Taxes: Property and general...................... 49.9 51.3 (1.4) 232.8 239.4 (6.6)
Current income....................... 54.4 49.8 4.6 194.3 170.4 23.9
Deferred income...................... (10.0) (12.0) 2.0 (23.9) (14.4) (9.5)
Investment tax credits recognized.... (2.5) (2.1) (0.4) (9.0) (8.8) (0.2)
Total......................................... 609.5 574.3 35.2 2,288.2 2,222.7 65.5
Utility operating income........................... 100.5 78.5 22.0 366.0 345.9 20.1
Other income (expense)
Equity in earnings of unconsolidated affiliates:
Earnings from operations........................ 12.6 6.1 6.5 31.0 29.2 1.8
Gain from contract termination.................. 0.0 0.0 0.0 0.0 29.9 (29.9)
Allowance for funds used during construction -
equity.......................................... 2.0 2.1 (0.1) 7.6 6.8 0.8
Other income (deductions) - net................... (5.3) (1.6) (3.7) (14.0) (8.0) (6.0)
Income taxes on non-regulated operations and
non-operating items............................. 3.4 3.0 0.4 14.6 (5.1) 19.7
Total......................................... 12.7 9.6 3.1 39.2 52.8 (13.6)
Income before interest charges...................... 113.2 88.1 25.1 405.2 398.7 6.5
Interest charges
Interest on utility long-term debt................ 25.4 25.7 (0.3) 101.2 103.3 (2.1)
Other utility interest and amortization........... 5.7 4.3 1.4 22.0 20.1 1.9
Non-regulated interest and amortization........... 4.9 2.7 2.2 18.8 9.9 8.9
Allowance for funds used during
construction - debt............................. (2.5) (3.6) 1.1 (11.3) (10.4) (0.9)
Total......................................... 33.5 29.1 4.4 130.7 122.9 7.8
Net income ......................................... 79.7 59.0 20.7 274.5 275.8 (1.3)
Preferred stock dividends........................... 3.1 3.1 0.0 12.2 12.5 (0.3)
Earnings available for common stock ................ $76.6 $55.9 $20.7 $262.3 $263.3 ($1.0)
Average number of common and equivalent
shares outstanding (000's)........................68,790 67,973 68,679 67,416
Earnings per average common share................... $1.11 $0.82 $0.29 $3.82 $3.91 ($0.09)
Common dividends declared per share.................$0.690 $0.675 $0.015 $2.745 $2.685 $0.060
Return on average common equity..................... 12.6% 13.4%
See Notes to Financial Statements.
This information is not given in connection with any sale or offer for sale or offer to buy any security.
</TABLE>
</PAGE>
<PAGE>
<TABLE>
NORTHERN STATES POWER COMPANY
A Consolidated Statement of
Northern States Power Company (Minnesota) and Subsidiaries
BALANCE SHEETS (Unaudited)
<CAPTION>
December 31
1996 1995 Increase
(Millions of dollars)
<S> <C> <C> <C>
ASSETS
UTILITY PLANT
Electric.................................................................. $6,766.9 $6,553.4 $213.5
Gas....................................................................... 750.4 710.1 40.3
Other..................................................................... 331.4 299.6 31.8
Total................................................................. 7,848.7 7,563.1 285.6
Accumulated provision for depreciation.................................. (3,611.2) (3,343.8) (267.4)
Nuclear fuel.............................................................. 892.5 843.9 48.6
Accumulated provision for amortization.................................. (792.1) (752.8) (39.3)
Net utility plant..................................................... 4,337.9 4,310.4 27.5
CURRENT ASSETS
Cash and cash equivalents................................................. 51.1 28.8 22.3
Short-term investments.................................................... 0.0 0.2 (0.2)
Customer accounts receivable - net........................................ 286.5 281.6 4.9
Unbilled utility revenues................................................. 147.4 112.7 34.7
Other receivables......................................................... 85.2 79.0 6.2
Fuel and supplies inventory - at average cost............................. 154.4 144.5 9.9
Prepayments and other..................................................... 72.6 57.7 14.9
Total current assets.................................................... 797.2 704.5 92.7
OTHER ASSETS
Regulatory assets......................................................... 354.1 374.2 (20.1)
Equity investments in non-regulated projects and other investments........ 451.2 289.5 161.7
External decommissioning fund investments................................. 260.8 203.6 57.2
Non-regulated property - net.............................................. 192.8 177.6 15.2
Long-term receivables..................................................... 139.5 83.0 56.5
Intangible and other assets............................................... 103.4 85.8 17.6
Total other assets..................................................... 1,501.8 1,213.7 288.1
TOTAL ASSETS.......................................................... $6,636.9 $6,228.6 $408.3
LIABILITIES AND EQUITY
CAPITALIZATION
Common stock equity
Common stock and premium................................................ $811.4 $769.5 $41.9
Retained earnings....................................................... 1,340.8 1,266.0 74.8
Leveraged common stock held by ESOP .................................... (19.1) (10.6) (8.5)
Currency translation adjustments - net.................................. 2.8 2.5 0.3
Total common stock equity............................................. 2,135.9 2,027.4 108.5
Cumulative preferred stock and premium.................................... 240.5 240.5 0.0
Long-term debt............................................................ 1,592.6 1,542.2 50.4
Total capitalization.................................................. 3,969.0 3,810.1 158.9
CURRENT LIABILITIES
Long-term debt due within one year........................................ 119.6 25.8 93.8
Other long-term debt potentially due within one year...................... 141.6 141.6 0.0
Short-term debt - primarily commercial paper.............................. 368.4 216.2 152.2
Accounts payable.......................................................... 236.3 246.0 (9.7)
Taxes accrued............................................................. 204.3 202.8 1.5
Interest accrued.......................................................... 34.7 31.8 2.9
Dividends payable on common and preferred stocks.......................... 50.4 48.9 1.5
Accrued payroll, vacation and other....................................... 81.0 78.3 2.7
Total current liabilities............................................. 1,236.3 991.4 244.9
OTHER LIABILITIES
Deferred income taxes..................................................... 804.3 841.2 (36.9)
Deferred investment tax credits........................................... 149.6 161.5 (11.9)
Regulatory liabilities.................................................... 302.7 242.8 59.9
Pension and other benefit obligations..................................... 114.3 115.8 (1.5)
Other long-term obligations and deferred income........................... 60.7 65.8 (5.1)
Total other liabilities............................................... 1,431.6 1,427.1 4.5
TOTAL LIABILITIES AND EQUITY........................................ $6,636.9 $6,228.6 $408.3
BOOK VALUE PER SHARE $30.93 $29.74
SHARES OF COMMON STOCK OUTSTANDING AT December 31 (THOUSANDS) 69,064 68,176
See Notes to Financial Statements.
This information is not given in connection with any
sale or offer for sale or offer to buy any security.
</TABLE>
</PAGE>
<PAGE>
<TABLE>
NORTHERN STATES POWER COMPANY
A Consolidated Statement of
Northern States Power Company (Minnesota) and Subsidiaries
STATEMENTS OF CASH FLOWS (Unaudited)
<CAPTION>
Year Ended
December 31
1996 1995
(Millions of dollars)
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income............................................................. $274.5 $275.8
Adjustments to reconcile net income to cash from operating activities:
Depreciation and amortization........................................ 335.6 322.3
Nuclear fuel amortization............................................ 45.8 49.8
Deferred income taxes................................................ (30.6) (11.1)
Deferred investment tax credits recognized........................... (9.4) (9.1)
Allowance for funds used during construction - equity................ (7.6) (6.8)
Undistributed equity in earnings of unconsolidated
investee operations................................................ (26.3) (24.3)
Undistributed equity in gain from non-regulated project
termination settlements............................................ - (17.6)
Changes in working capital and other assets and liabilities.......... (46.0) (17.8)
Net cash provided by operating activities............................... 536.0 561.2
Cash Flows from Investing Activities:
Capital expenditures *................................................. (412.5) (401.0)
Allowance for funds used during construction - equity.................. 7.6 6.8
Sale of short-term investments - net................................... 0.1 0.7
Investment in external decommissioning fund............................ (40.5) (33.2)
Equity investments, loans and deposits for non-regulated
projects and other - net............................................. (194.3) (55.9)
Net cash used for investing activities.................................. (639.6) (482.6)
Cash Flows from Financing Activities:
Change in short-term debt - net issuances (repayments).................. 152.2 (22.2)
Proceeds from issuance of long-term debt - net.......................... 197.8 277.2
Loan to ESOP............................................................ - (15.0)
Repayment of long-term debt (including reacquisition premium)........... (67.6) (195.7)
Proceeds from issuance of common stock - net............................ 41.7 56.2
Dividends paid.......................................................... (198.2) (191.4)
Net cash provided by (used for) financing activities..................... 125.9 (90.9)
Net increase (decrease) in cash and cash equivalents...................... 22.3 (12.3)
Cash and cash equivalents at beginning of period.......................... 28.8 41.1
Cash and cash equivalents at end of period................................ $51.1 $28.8
See Notes to Financial Statements.
* Does not reflect changes in construction payables.
This information is not given in connection with any
sale or offer for sale or offer to buy any security.
</TABLE>
</PAGE>
NORTHERN STATES POWER COMPANY (MINNESOTA) AND SUBSIDIARIES (NSP)
Notes to Financial Statements
Due to the seasonality of NSP's electric and gas sales, operating results on
a quarterly basis are not necessarily an appropriate base from which to
project annual results.
Except for the historical statements contained herein, the matters discussed
in this investor relations release, including the statements regarding revenue
and earnings expectations and the anticipated impact of the proposed merger,
are forward looking statements that involve risks and uncertainties. Actual
results may vary materially. Factors that could cause actual results to
differ materially include, but are not limited to: general economic
conditions, including their impact on capital expenditures; business
conditions in the energy industry; competitive factors; unusual weather;
regulatory decisions regarding the proposed combination of NSP and Wisconsin
Energy Corporation (WEC); and the other risk factors listed from time to time
in NSP's Securities and Exchange Commission (SEC) reports, including Exhibit
99.01 to NSP's report on Form 10-Q for the quarter ended Sept. 30, 1996.
1. Significant Factors Affecting Operating Results
Regulated Operations
Estimated Impact of Weather on Regulated Earnings
NSP estimates sales levels under normal weather conditions and analyzes
the approximate effect of variations from historical average
temperatures on actual sales levels. The following summarizes the
estimated impact of weather on actual operating results (in relation to
sales under normal weather conditions):
Increase (Decrease)
1996 1995 1996
vs vs vs
Normal Normal 1995
Earnings per Share for:
Quarter Ended
Dec. 31 $0.08 $0.04 $0.04
Twelve Months Ended
Dec. 31 $0.16 $0.21 ($0.05)
The estimated impact of weather considers only the impacts of variations
from average temperatures. The first quarter of 1996 includes the
effects of extremely cold temperatures in late January and early
February of 1996. Although such cold weather in this period would be
expected to result in increased energy sales, an ice storm immediately
preceding the cold weather resulted in as many as 200,000 customers
being temporarily out of service, and bitterly cold temperatures
resulted in some customers shutting down or curtailing their operations.
Because these secondary weather impacts are not reliably quantifiable,
their expected effects (an offset to the energy sales increase from cold
weather) have not been included in the estimated impact of weather on
1996 operating results.
Conservation and Energy Management
Conservation and energy management expenses increased in both the three-
and twelve-month periods ended Dec. 31, 1996 compared to the same
periods in the prior year due to higher amortization levels and
concurrent rate recovery of deferred electric and gas conservation and
energy management program costs. These higher amortization levels are
consistent with new retail electric and gas rate adjustment clauses in
the Company's Minnesota jurisdiction effective beginning May 1, 1995,
and Nov. 1, 1995, respectively. Rate recovery levels were again
increased in August 1996 for electric and September 1996 for gas.
Non-regulated Operations
The following summarizes the earnings contributions of NSP's non-
regulated businesses:
3 Mos. Ended 12 Mos. Ended
12/31/96 12/31/95 12/31/96 12/31/95
NRG Energy, Inc. (NRG) $0.13 $0.01 $0.29 $0.46*
Eloigne Company 0.01 0.00 0.05 0.02
Cenerprise, Inc.
(Cenerprise) (0.04) 0.00 (0.12) (0.02)
Other 0.00 0.00 0.02 0.04
Total $0.10 $0.01 $0.24 $0.50
* Includes non-recurring transactions contributing $0.22 per share as
discussed below.
Due to the nature of these non-regulated operations, NSP anticipates
that the earnings from non-regulated operations will experience more
variability than regulated utility businesses. As discussed below,
NSP's non-regulated earnings for these periods are experiencing such
variability.
NRG
NRG's fourth quarter 1996 earnings increased from the same period one
year ago due primarily to 1996 equity earnings from the new Schkopau
and NRG Generating (U.S.) Inc. (NRGG) projects. One unit of the
Schkopau power generation facility began commercial operation in March
1996, with the second unit beginning operation in late July of 1996.
NRG acquired its interest in NRGG in early 1996.
NRG's earnings for the year ended Dec. 31, 1995 included two non-
recurring items which added 22 cents to 1995 earnings. A gain of
approximately 26 cents per share was recorded for a power sales
contract termination settlement, which was partially offset by a
domestic energy project write-down of four cents per share. Excluding
these non-recurring items, NRG's earnings for the years ended December
31 increased in 1996 compared with 1995 due primarily to higher equity
in earnings of projects. Equity in earnings of projects increased in
the year ended Dec. 31, 1996 primarily due to first time earnings from
Schkopau and NRG Generating (U.S.) Inc. and higher income from Scudder
Latin American Power Projects. These earnings were partially offset by
lower equity earnings from the MIBRAG project. Equity in earnings from
MIBRAG decreased primarily due to an expected decline in heating
briquette and coal sales.
Excluding non-recurring items, NRG's earnings were higher in 1996 as
compared to 1995 despite experiencing an increased level of business
development costs in 1996 as it has pursued several international and
domestic projects. Until there is substantial assurance that a project
in development will come to financial closure, such costs are expensed.
Cenerprise
Cenerprise's earnings declined in the three-month period ended Dec. 31,
1996 compared to the same period one year ago, largely due to price
volatility in the gas market which adversely affected earnings from
Cenerprise's joint venture, Enerval. Cenerprise's earnings for the 12
months ended Dec. 31, 1996 decreased compared to the same period one
year ago largely due to price volatility in the gas market, as
discussed above, and losses incurred from the gas trading business.
Cenerprise curtailed its gas trading activity in the second quarter of
1996 and will purchase gas only to supply its end-use customers.
2. Business Developments
Proposed Business Combination
On April 28, 1995, NSP and WEC entered into an Agreement and Plan of
Merger, which provides for a strategic business combination of NSP and
WEC in a "merger-of-equals" transaction to form Primergy Corporation
(Primergy). As the holding company of the combined enterprise,
Primergy would be the parent company of the operations of both NSP and
WEC and be registered under the Public Utility Holding Company Act of
1935 (PUHCA), as amended. Detailed information on the merger and the
regulatory approvals necessary are contained in NSP's filings with the
SEC, including NSP's Annual Report on Form 10-K for 1995 and the
Quarterly Report on Form 10-Q for the period ended Sept. 30, 1996.
The Federal Energy Regulatory Commission (FERC), the Minnesota Public
Utilities Commission (MPUC), and the Public Service Commission of
Wisconsin (PSCW), among others, must approve the merger before it can
be completed. NSP and WEC are hopeful that the FERC, MPUC and PSCW
will rule on the pending merger applications in the first quarter of
1997. In each of these proceedings, various intervenors and members of
the regulatory staffs have taken positions on certain issues
substantially different from those being requested by NSP and WEC.
Under the merger agreement, completion of the merger is conditioned
upon the prior receipt of all necessary regulatory approvals without
the imposition of materially adverse terms. NSP cannot predict at this
time whether this condition will be met.
NRG Developments
In November 1996, NRG, together with its partners, Ansaldo Energia SpA,
Italy, and P.T. Kiana Metra Tujuhdua, Indonesia, signed a power
contract with PT Perusahaan Listrik Negara, the state-owned Indonesian
Electric Company, to build, own and operate a 400 megawatt, coal-fired
power station in Cilegon, West Java, Indonesia. NRG will have a 45
percent ownership interest in the project. NRG will operate and
maintain the power plant for the 30 year life of the project.
Construction of the new power plant is due to begin in mid-1997 and is
anticipated to be fully operational by the year 2000. Ansaldo will
have responsibility for construction. The coal-fired power plant will
sell its entire output to the local Java-Bali grid. The West Java
project will bring the total generating capacity operated by NRG in the
Asia/Pacific Rim market to over 2,200 megawatts. NRG expects to invest
approximately $65 million for this project.
In December 1996, NRG reached agreement with Indeck Energy Services
(Europe) to acquire a 50% ownership interest in the Enfield Energy
Centre, a 350 MW power project located in the North London Borough of
Enfield. The power station is planned to begin commercial operations
in the autumn of 1999 and will be jointly developed by NRG and Indeck
Services (Europe). The merchant power station will sell its output to
the U.K. grid. Financial close is scheduled for the summer of 1997.
NRG expects to invest approximately $60 million for this project.
Indeck Energy Services (Europe), a subsidiary of Indeck Energy Services
Inc. of Illinois, currently owns and operates over 440 MW of power
capacity in the U.S.
On Dec. 19, 1996 NRG announced that its cash tender offer for all of
the outstanding shares of Compania Boliviana de Energia Electrica S.A.
- Boliviana Power Company Limited (COBEE) had expired. As of the
expiration date, approximately 3,991,774 shares (or 95% of the shares
outstanding) had been validly tendered and not withdrawn, including
66,313 shares tendered pursuant to notices of guaranteed delivery. NRG
and a joint venture partner have accepted these shares for payment at
the purchase price of $43.00 per share in cash. At Dec. 31, 1996, NRG
had invested approximately $80 million as an equity contribution to the
joint venture for the purchase of COBEE shares. In 1996, electricity
generated by COBEE represented approximately 30 percent of all the
electricity generated in Bolivia. COBEE's maximum generating capacity
was 153.2 megawatts. Upon the expected completion of an expansion in
the fall of 1998, COBEE's total generating capacity will be 218.8
megawatts.
On Dec. 20, 1996, representatives of the Estonian Government, the
state-owned Eesti Energia (EE), and NRG signed a development and
cooperation agreement creating the start of an extensive joint project
to develop and restructure Estonian power plants. NRG's goal is to
create a strong power company in cooperation with EE that would
economically produce electricity for the Estonian people, as well as
industry, and that would, at the same time, be able to solve the
potential environmental and social problems. Financing for the joint
venture's refurbishment of the Estonian generation plants would include
$200 million of project level financing and a $50 million equity
contribution from NRG, which would be the largest foreign investment
into the Estonian economy to date. According to the agreement, this
phase of the project, which will produce the business plan of NRG and
EE, will be completed by July 1, 1997.
