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): April 23, 1999
Northern States Power Company
(Exact Name of Registrant as Specified in Charter)
Minnesota 1-3034
(State or Other Jurisdiction of Incorporation) (Commission File Number)
41-0448030
(IRS Employer Identification No.)
414 Nicollet Mall 55401
Minneapolis, Minnesota (Zip Code)
(Address of Principal Executive Offices)
(612) 330-5500
(Registrant's telephone number, including area code)
<PAGE>
ITEM 5. - OTHER EVENTS
As previously reported in Northern States Power Company's Current Report on
Form 8-K, dated as of March 24, 1999, which was filed on March 25, 1999,
Northern States Power Company, a Minnesota corporation ("NSP"), and New Century
Energies, Inc., a Delaware corporation ("NCE"), entered into an Agreement and
Plan of Merger, dated as of March 24, 1999 (the "Merger Agreement"), providing
for a strategic business combination of NSP and NCE. Pursuant to the Merger
Agreement, NCE will be merged with and into NSP, with NSP as the surviving
corporation in the merger (the "Merger"). Subject to the terms of the Merger
Agreement, at the time of the Merger, each share of common stock, par value
$1.00 per share, of NCE ("NCE Common Stock") (other than certain shares to be
cancelled), together with any associated preferred share purchase rights, will
be converted into the right to receive 1.55 shares of common stock, par value
$2.50 per share, of NSP ("NSP Common Stock"). Cash will be paid in lieu of any
fractional shares of NSP Common Stock which holders of NCE Common Stock would
otherwise receive.
Consummation of the Merger is subject to the satisfaction or waiver of
certain closing conditions, including, among others, approval by the
shareholders of NSP and NCE, approval or regulatory review by certain state
utilities regulators, the Securities and Exchange Commission under the Public
Utility Holding Company Act of 1935, as amended, the Federal Energy Regulatory
Commission, the Nuclear Regulatory Commission and the Federal Communications
Commission, and expiration or termination of the waiting period applicable to
the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
The merger is expected to be a tax-free, stock-for-stock exchange for
shareholders of both companies (except with respect to any cash received by NCE
shareholders in lieu of fractional shares), and to be accounted for as pooling
of interests. Each of NSP and NCE has agreed to certain undertakings and
limitations regarding the conduct of their respective businesses prior to the
closing of the transaction. The Merger is expected to take from 12 to 18 months
to complete.
The Merger Agreement was filed as Exhibit 2.1 to NSP's March 24, 1999 Form
8-K, and is hereby incorporated herein by reference.
The merger agreement provides that the combined company will be created by
first transferring NSP's utility assets (other than investments in and assets of
subsidiaries) into a newly formed, wholly owned subsidiary (which is referred to
herein as New NSP Utility Sub). At the same time, New NSP Utility Sub will
assume all of NSP's liabilities associated with the assets transferred. Then NCE
will merge into NSP, with NSP as the surviving corporate entity in the merger.
The surviving corporation, which is referred to herein as New Co., will be a
holding company for the combined assets and operations of NSP and NCE. If
difficulties arise in obtaining the approvals and consents required to transfer
NSP's utility assets to New NSP Utility Sub, NSP and NCE may negotiate a
mutually acceptable alternative.
New Co. Pro Forma Combined Condensed Information
- ------------------------------------------------------
The unaudited pro forma condensed financial statements included in Exhibit
99.01 give effect to the merger using the pooling of interests method of
accounting. Under this accounting method, NSP's and NCE's balance sheets and
income statements are treated as if they have always been combined for
accounting and financial reporting purposes. These unaudited pro forma combined
condensed financial statements should be read in conjunction with the historical
financial statements and related notes of NSP and NCE, which are included in the
Annual Reports on Form 10-K of the respective companies for the year ended
December 31, 1998.
The unaudited pro forma combined condensed balance sheets at December 31,
1998, assumes the merger had been completed on December 31, 1998. The unaudited
pro forma combined condensed statements of income for the three years ended
December 31, 1998, assume the merger had been completed on January 1, 1996, the
beginning of the earliest period presented.
The unaudited pro forma combined condensed financial statements do not
necessarily indicate what the combined company's financial position or operating
results would have been if the merger had been completed on the assumed
completion dates and they do not necessarily indicate future operating results
of the combined company.
New NSP Utility Sub Pro Forma Condensed Information
- ----------------------------------------------------------
The pro forma financial information included in Exhibit 99.02 adjusts the
historical financial statements of NSP after giving effect to the transfer
of ownership of all NSP utility assets (other than investments in and assets of
subsidiaries) to New NSP Utility Sub and the assumption by New NSP Utility Sub
of all of NSP's liabilities associated with the assets transferred.
The unaudited pro forma condensed balance sheets at December 31, 1998,
assumes the merger had been completed on December 31, 1998. The unaudited pro
forma condensed statements of income for the three years ended December 31,
1998, assume the merger had been completed on January 1, 1996, the beginning of
the earliest period presented.
The unaudited pro forma condensed financial statements do not necessarily
indicate what New NSP Utility Sub's financial position or operating results
would have been if the merger had been completed on the assumed completion dates
and they do not necessarily indicate future operating results of New NSP Utility
Sub.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS, AND EXHIBITS.
(c) Exhibits
--------
Exhibit 99.01 Pro forma combined condensed financial infor-
mation of Northern States Power Company and
New Century Energies, Inc.
Exhibit 99.02 Pro forma condensed financial information of
New NSP Utility Sub.
Exhibit 99.03 Agreement and Plan of Merger, dated as of
March 24, 1999, by and between Northern
States Power Company and New Century
Energies, Inc. (incorporated by reference to
Exhibit 2.1 to the Current Report on Form 8-K
of New Century Energies, Inc. dated March
24, 1999).
<PAGE>
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
By: /s/ Roger D. Sandeen
-----------------------
Name: Roger D. Sandeen
Title: Vice President and Controller
Date: April 23, 1999
Exhibit 99.01
<TABLE>
<CAPTION>
New Co.
Unaudited Pro Forma Combined Condensed Statements of Income
Year Ended December 31, 1998
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
(note 2)
NSP NCE Reporting Pro Forma Pro Forma
(as Reported)(as Reported) Adjustments Adjustments Combined
Operating Revenues
Electric $2,362,351 $2,697,486 ($74,518) $0 $4,985,319
Gas 456,823 841,276 (188,095) 0 1,110,004
Nonregulated and Other Revenue 0 72,143 444,843 0 516,986
Earnings From Equity Investments 0 0 115,985 0 115,985
Total Operating Revenues 2,819,174 3,610,905 298,215 0 6,728,294
Operating Expenses
Electric Fuel and Purchased Power 689,275 1,357,198 (72,709) 0 1,973,764
Cost of Gas Sold and Transported 267,050 562,583 (170,140) 0 659,493
Other Operation and Maintenance 794,332 637,743 (90,607) 0 1,341,468
Depreciation and Amortization 338,225 268,743 (8,055) 0 598,913
Taxes Other than Income Taxes 220,620 134,137 (2,175) 0 352,582
Income Taxes - Utility 145,383 0 (145,383) 0 0
Nonregulated Operating Expenses 0 0 592,106 0 592,106
Total Operating Expenses 2,454,885 2,960,404 103,037 0 5,518,326
Operating Income 364,289 650,501 195,178 0 1,209,968
Other Income (Expense)
Income from Nonregulated Businesses Before Interest and Taxes 51,171 0 (51,171) 0 0
Equity Earnings From Unconsolidated Subsidiaries 0 36,101 (36,101) 0 0
Other Income (Deductions) - net 4,812 (4,250) 37,477 0 38,039
Income Taxes on Nonregulated & Nonoperating Items 40,588 0 (40,588) 0 0
Total Other Income (Expense) 96,571 31,851 (90,383) 0 38,039
Financing Costs
Interest Charges 162,737 181,906 0 0 344,643
Distributions on Mandatorily Redeemable Preferred Securities of
Subsidiary Trusts 15,750 17,561 0 0 33,311
Dividends & Redemption Premiums on Preferred Stock of Subsidiaries 0 5,332 0 0 5,332
Total Financing Costs 178,487 204,799 0 0 383,286
Income before Income Taxes 282,373 477,553 104,795 0 864,721
Income Taxes 0 135,596 104,795 0 240,391
Net Income 282,373 341,957 0 0 624,330
Preferred Stock Dividends & Redemption Premiums of NSP 5,548 0 0 0 5,548
Earnings Available for Common Shareholders $276,825 $341,957 $0 $0 $618,782
Average Common Shares Outstanding (Note 1) 150,502 111,859 0 61,522 323,883
Average Common and Potentially Diluted Shares Outstanding (Note 1) 150,743 112,008 0 61,604 324,355
Earnings Per Share - Basic $1.84 $3.06 $1.91
Earnings Per Share - Diluted $1.84 $3.05 $1.91
<FN>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements
</FN>
</TABLE>
<PAGE>
<TABLE>
Exhibit 99.01
<CAPTION>
New Co.
Unaudited Pro Forma Combined Condensed Statements of Income
Year Ended December 31, 1997
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
(note 2)
NSP NCE Reporting Pro Forma Pro Forma
(as Reported)(as Reported) Adjustments Adjustments Combined
Operating Revenues
Electric $2,218,550 $2,473,359 ($22,861) $0 $4,669,048
Gas 515,196 816,596 (179,257) 0 1,152,535
Nonregulated and Other Revenue 0 52,570 425,689 0 478,259
Earnings From Equity Investments 0 0 52,766 0 52,766
Total Operating Revenues 2,733,746 3,342,525 276,337 0 6,352,608
Operating Expenses
Electric Fuel and Purchased Power 596,238 1,203,292 (21,938) 0 1,777,592
Cost of Gas Sold and Transported 331,296 543,291 (167,902) 0 706,685
Other Operation and Maintenance 745,828 594,359 (57,268) 0 1,282,919
Depreciation and Amortization 325,880 243,078 (9,414) 0 559,544
Taxes Other than Income Taxes 227,893 129,280 (2,007) 0 355,166
Income Taxes - Utility 144,855 0 (144,855) 0 0
Nonregulated Operating Expenses 0 0 525,668 0 525,668
Total Operating Expenses 2,371,990 2,713,300 122,284 0 5,207,574
Operating Income 361,756 629,225 154,053 0 1,145,034
Other Income (Expense)
Income from Nonregulated Businesses Before Interest and Taxes 12,078 0 (12,078) 0 0
Equity Earnings From Unconsolidated Subsidiaries 0 34,166 (34,166) 0 0
Merger Costs (29,005) (34,088) 0 0 (63,093)
Other Income (Deductions) - net 3,515 (27,267) 37,046 0 13,294
Income Taxes on Nonregulated & Nonoperating Items 48,145 0 (48,145) 0 0
Total Other Income (Expense) 34,733 (27,189) (57,343) 0 (49,799)
Financing Costs
Interest Charges 144,732 187,028 0 0 331,760
Distributions on Mandatorily Redeemable Preferred Securities of
Subsidiary Trusts 14,437 7,850 0 0 22,287
Dividends on Preferred Stock of Subsidiaries 0 11,752 0 0 11,752
Total Financing Costs 159,169 206,630 0 0 365,799
Income before Income Taxes and Extraordinary Item 237,320 395,406 96,710 0 729,436
Income Taxes 0 133,919 96,710 0 230,629
Income before Extraordinary Item 237,320 261,487 0 0 498,807
Extraordinary Item - U.K. Windfall Tax 0 (110,565) 0 0 (110,565)
Net Income 237,320 150,922 0 0 388,242
Preferred Stock Dividends & Redemption Premiums of NSP 11,071 0 0 0 11,071
Earnings Available for Common Shareholders $226,249 $150,922 $0 $0 $377,171
Average Common Shares Outstanding (Note 1) 140,594 104,805 0 57,643 303,042
Average Common and Potentially Diluted Shares Outstanding (Note 1) 140,870 104,872 0 57,680 303,422
Earnings Per Share - Basic and Diluted:
Income Before Extraordinary Item $1.61 $2.50 $1.61
Extraordinary Item - U.K. Windfall Tax $0.00 ($1.06) ($0.37)
Total $1.61 $1.44 $1.24
<FN>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements
</FN>
</TABLE>
<PAGE>
Exhibit 99.01
<TABLE>
<CAPTION>
New Co.
Unaudited Pro Forma Combined Condensed Statements of Income
Year Ended December 31, 1996
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
(note 2)
NSP NCE Reporting Pro Forma Pro Forma
(as Reported)(as Reported) Adjustments Adjustments Combined
Operating Revenues
Electric $2,127,413 $2,416,539 ($7,806) $0 $4,536,146
Gas 526,793 640,497 (68,880) 0 1,098,410
Nonregulated and Other Revenue 0 39,998 380,589 0 420,587
Earnings From Equity Investments 0 0 31,057 0 31,057
Total Operating Revenues 2,654,206 3,097,034 334,960 0 6,086,200
Operating Expenses
Electric Fuel and Purchased 544,763 1,145,862 (7,649) 0 1,682,976
Cost of Gas Sold and Transported 335,453 393,163 (61,257) 0 667,359
Other Operation and Maintenance 707,280 568,581 (35,389) 0 1,240,472
Depreciation and Amortization 306,432 224,865 (7,561) 0 523,736
Taxes Other than Income Taxes 232,824 128,980 (1,429) 0 360,375
Income Taxes - Utility 161,410 0 (161,410) 0 0
Nonregulated Operating Expenses 0 0 455,163 0 455,163
Total Operating Expenses 2,288,162 2,461,451 180,468 0 4,930,081
Operating Income 366,044 635,583 154,492 0 1,156,119
Other Income (Expense)
Income from Nonregulated Businesses Before Interest and Taxes 18,543 0 (18,543) 0 0
Equity Earnings From Unconsolidated Subsidiaries 0 389 (389) 0 0
Merger Costs 0 (21,107) 0 0 (21,107)
Other Income (Deductions) - net 6,051 (13,775) 25,850 0 18,126
Income Taxes on Nonregulated & Nonoperating Items 14,600 0 (14,600) 0 0
Total Other Income (Expense) 39,194 (34,493) (7,682) 0 (2,981)
Financing Costs
Interest Charges 130,699 161,601 0 0 292,300
Distributions on Mandatorily Redeemable Preferred Securities of
Subsidiary Trusts 0 1,526 0 0 1,526
Dividends on Preferred Stock of Subsidiaries 0 11,969 0 0 11,969
Total Financing Costs 130,699 175,096 0 0 305,795
Income before Income Taxes 274,539 425,994 146,810 0 847,343
Income Taxes 0 153,653 146,810 0 300,463
Net Income 274,539 272,341 0 0 546,880
Preferred Stock Dividends & Redemption Premiums of NSP 12,245 0 0 0 12,245
Earnings Available for Common Shareholders $262,294 $272,341 $0 $0 $534,635
Average Common Shares Outstanding (Note 1) 137,121 103,059 0 56,682 296,862
Average Common and Potentially Diluted Shares Outstanding (Note 1) 137,358 103,102 0 56,706 297,166
Earnings Per Share - Basic $1.91 $2.64 $1.80
Earnings Per Share - Diluted $1.91 $2.64 $1.80
<FN>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial Statements
</FN>
</TABLE>
<PAGE>
Exhibit 99.01
<TABLE>
<CAPTION>
New Co.
Unaudited Pro Forma Combined Condensed Balance Sheets
December 31, 1998
(In thousands)
<S> <C> <C> <C> <C> <C>
NSP NCE Reporting Pro Forma Pro Forma
(as Reported)(as Reported) Adjustments Adjustments Combined
ASSETS
PROPERTY, PLANT AND EQUIPMENT
Electric (Note 3) $7,199,843 $7,097,070 ($120,095) $0 $14,176,818
Gas (Note 3) 884,182 1,210,605 (10,537) 0 2,084,250
Other (Note 3) 365,101 926,007 535,601 0 1,826,709
Total Property, Plant and Equipment 8,449,126 9,233,682 404,969 0 18,087,777
Accumulated Provision for Depreciation (Note 3) (4,155,641) (3,351,659) (122,445) 0 (7,629,745)
Nuclear Fuel - Net 101,749 0 0 0 101,749
Net Property, Plant and Equipment 4,395,234 5,882,023 282,524 0 10,559,781
CURRENT ASSETS
Cash and Cash Equivalents 42,364 56,667 0 0 99,031
Accounts Receivable - Net 354,215 319,145 0 0 673,360
Accrued Unbilled Utility Revenues 139,098 130,455 0 0 269,553
Fuel and Gas Inventories 58,806 77,277 0 0 136,083
Material and Supplies Inventories 110,267 69,298 0 0 179,565
Prepayments and Other 49,315 149,715 0 0 199,030
Total Current Assets 754,065 802,557 0 0 1,556,622
OTHER ASSETS
Equity Investments 862,596 340,874 0 0 1,203,470
External Decommissioning Fund and Other Investments 479,402 64,562 0 0 543,964
Regulatory Assets 331,940 381,632 0 0 713,572
Nonregulated Property - Net (Note 3) 282,524 0 (282,524) 0 0
Other 290,536 200,316 0 0 490,852
Total Other Assets 2,246,998 987,384 (282,524) 0 2,951,858
TOTAL ASSETS $7,396,297 $7,671,964 $0 $0 $15,068,261
LIABILITIES AND EQUITY
CAPITALIZATION
Common Stock (Note 1) $381,742 $114,491 0 329,162 $825,395
Other Stockholder's Equity (Note 1) 2,099,504 2,500,336 0 (329,162) 4,270,678
Total Common Stockholder's Equity 2,481,246 2,614,827 0 0 5,096,073
Preferred Stockholder's Equity 105,340 0 0 0 105,340
Mandatorily Redeemable Preferred Securities of Subsidiary Trusts 200,000 294,000 0 0 494,000
Long-Term Debt 1,851,146 2,205,545 0 0 4,056,691
Total Capitalization 4,637,732 5,114,372 0 0 9,752,104
CURRENT LIABILITIES
Current Portion of Long-Term Debt 369,200 138,165 0 0 507,365
Short-Term Debt 239,830 524,394 0 0 764,224
Accounts Payable 271,799 285,080 0 0 556,879
Taxes Accrued 170,274 85,384 0 0 255,658
Other Accrued Liabilites 181,159 291,800 0 0 472,959
Total Current Liabilities 1,232,262 1,324,823 0 0 2,557,085
OTHER LIABILITIES
Deferred Income Taxes 814,983 947,247 0 0 1,762,230
Deferred Investment Tax Credits 128,444 100,925 0 0 229,369
Regulatory Liabilities 372,239 0 0 0 372,239
Other Liabilities and Deferred Credits 210,637 184,597 0 0 395,234
Total Other Liabilities 1,526,303 1,232,769 0 0 2,759,072
TOTAL EQUITY AND LIABILITIES $7,396,297 $7,671,964 $0 $0 $15,068,261
<FN>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements
</FN>
</TABLE>
<PAGE>
EXHIBIT 99.01
- --------------
NEW CO.
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
1. The unaudited pro forma combined condensed financial statements reflect
the conversion of each NCE Share into 1.55 shares of common stock of the
combined company and the continuation of each NSP Common Share outstanding as
one share of common stock of the combined company ($2.50 par value), as provided
in the merger agreement. The unaudited pro forma combined condensed financial
statements are presented as if the companies were combined during all periods
included therein.
2. The unaudited pro forma combined condensed income statements reflect
certain reclassifications to conform the presentation of operating results.
These reporting adjustments include: (a) separate presentation of nonregulated
revenues and equity earnings in Operating Revenues; (b) separate presentation of
all nonregulated expenses, including project write-downs, in Operating Expenses;
(c) presentation of nonregulated interest and other income, including gains from
project sales, in Other Income (Deductions) - Net; and (d) presentation of all
income taxes (regulated and nonregulated) on a single line before arriving at
Net Income.
3. The unaudited pro forma combined condensed balance sheet reflects
reporting adjustments to conform the presentation of: (a) investments and
deferred charges (in Other Assets); and (b) nonregulated property (in Property,
Plant and Equipment) and (c) construction work in progress (in Other
Property, Plant and Equipment).
4. The allocation of the estimated cost savings resulting from the merger to
Northern States Power, New Century Energies and their customers, net of the
costs incurred to achieve such savings, will be subject to regulatory review and
approval. At the time the merger agreement was signed, cost savings resulting
from the Merger were estimated to be approximately $1.1 billion over a ten-year
period, net of transaction costs (including fees for financial advisors,
attorneys, accountants, filings and printing) and net of costs to achieve the
savings. None of the estimated cost savings, the costs to achieve such savings,
or the transaction costs have been reflected in the unaudited pro forma combined
condensed financial statements. Nonrecurring costs directly attributable to the
merger are expected to be deferred and amortized to expense in periods
subsequent to the consummation of the merger consistent with the anticipated
recovery in rates. Accordingly, no pro forma adjustments have been made to
retained earnings.
5. Intercompany transactions (including purchased and exchanged power
transactions) between NSP and NCE during the periods presented were not material
and, accordingly, no pro forma adjustments were made to eliminate such
transactions.
Exhibit 99.02
<TABLE>
<CAPTION>
New NSP Utility Sub
Unaudited Pro Forma Condensed Income Statement
Year Ended December 31, 1998
(In thousands)
<S> <C> <C> <C> <C>
NSP See Pro Forma Pro Forma
(As Reported) Notes Adjustments
Utility Operating Revenues
Electric $2,362,351 2,4 ($118,578) $2,243,773
Gas 456,823 2,4 (96,255) 360,568
Total 2,819,174 (214,833) 2,604,341
Utility Operating Expenses
Electric Production-Fuel and Purchased Power 689,275 2,4 37,053 726,328
Cost of Gas Purchased and Transported 267,050 2,4 (41,094) 225,956
Other Operation and Maintenance 794,332 2,4 (67,497) 726,835
Depreciation and Amortization 338,225 2 (42,167) 296,058
Property and General Taxes 220,620 2 (17,058) 203,562
Income Taxes 145,383 2 (23,924) 121,459
Total 2,454,885 (154,687) 2,300,198
Utility Operating Income 364,289 (60,146) 304,143
Other Income (Expense)
Income from Nonregulated Businesses - Before Interest & Taxes 51,171 2,3 (49,574) 1,597
Other Utility Income (Deductions) 4,812 2,3 4,209 9,021
Income Taxes on Nonregulated Operations & Nonoperating Items 40,588 2,3 (43,080) (2,492)
Total 96,571 (88,445) 8,126
Income Before Financing Costs 460,860 (148,591) 312,269
Financing Costs
Total Interest Charges 162,737 2,3 (59,604) 103,133
Distributions on Redeemable Preferred Securities of Subsidiary
Trust 15,750 2,3 (15,750) 0
Total 178,487 (75,354) 103,133
Net Income 282,373 (73,237) 209,136
Preferred Stock Dividends & Redemption Premiums 5,548 2,3 (5,548) 0
Earnings Available for Common Stock $276,825 ($67,689) $209,136
</TABLE>
<PAGE>
Exhibit 99.02
<TABLE>
<CAPTION>
New NSP Utility Sub
Unaudited Pro Forma Condensed Income Statement
Year Ended December 31, 1997
(In thousands)
<S> <C> <C> <C> <C>
NSP See Pro Forma Pro Forma
(As Reported) Notes Adjustments
Utility Operating Revenues
Electric $2,218,550 2,4 ($117,310) $2,101,240
Gas 515,196 2,4 (100,337) 414,859
Total 2,733,746 (217,647) 2,516,099
Utility Operating Expenses
Electric Production-Fuel and Purchased Power 596,238 2,4 38,097 634,335
Cost of Gas Purchased and Transported 331,296 2,4 (50,332) 280,964
Other Operation and Maintenance 745,828 2,4 (61,959) 683,869
Depreciation and Amortization 325,880 2 (39,386) 286,494
Property and General Taxes 227,893 2 (16,069) 211,824
Income Taxes 144,855 2 (26,318) 118,537
Total 2,371,990 (155,967) 2,216,023
Utility Operating Income 361,756 (61,680) 300,076
Other Income (Expense)
Income from Nonregulated Businesses - Before Interest & Taxes 12,078 2,3 (10,397) 1,681
Other Utility Income (Deductions) (25,490) 2,3 2,219 (23,271)
Income Taxes on Nonregulated Operations & Nonoperating Items 48,145 2,3 (39,285) 8,860
Total 34,733 (47,463) (12,730)
Income Before Financing Costs 396,489 (109,143) 287,346
Financing Costs
Total Interest Charges 144,732 2,3 (39,118) 105,614
Distributions on Redeemable Preferred Securities of Subsidiary
Trust 14,437 2,3 (14,437) 0
Total 159,169 (53,556) 105,613
Net Income 237,320 (55,587) 181,733
Preferred Stock Dividends & Redemption Premiums 11,071 2,3 (11,071) 0
Earnings Available for Common Stock $226,249 ($44,516) $181,733
</TABLE>
<PAGE>
Exhibit 99.02
<TABLE>
<CAPTION>
New NSP Utility Sub
Unaudited Pro Forma Condensed Income Statement
Year Ended December 31, 1996
(In thousands)
<S> <C> <C> <C> <C>
NSP See Pro Forma Pro Forma
(As Reported) Notes Adjustments
Utility Operating Revenues
Electric $2,127,413 2,4 ($120,655) $2,006,758
Gas 526,793 2,4 (100,213) 426,580
Total 2,654,206 (220,868) 2,433,338
Utility Operating Expenses
Electric Production-Fuel and Purchased Power 544,763 2,4 40,062 584,825
Cost of Gas Purchased and Transported 335,453 2,4 (50,848) 284,605
Other Operation and Maintenance 707,280 2,4 (67,799) 639,481
Depreciation and Amortization 306,432 2 (36,932) 269,500
Property and General Taxes 232,824 2 (15,880) 216,944
Income Taxes 161,410 2 (26,246) 135,164
Total 2,288,162 (157,643) 2,130,519
Utility Operating Income 366,044 (63,225) 302,819
Other Income (Expense)
Income from Nonregulated Businesses - Before Interest & Taxes 18,543 2,3 (16,918) 1,625
Other Utility Income (Deductions) 6,051 2,3 1,220 7,271
Income Taxes on Nonregulated Operations & Nonoperating Items 14,600 2,3 (17,111) (2,511)
Total 39,194 (32,809) 6,385
Income Before Financing Costs 405,238 (96,034) 309,204
Financing Costs
Total Interest Charges 130,699 2,3 (39,328) 91,371
Distributions on Redeemable Preferred Securities of Subsidiary
Trust 0 2,3 0 0
Total 130,699 (39,328) 91,371
Net Income 274,539 (56,706) 217,833
Preferred Stock Dividends & Redemption Premiums 12,245 2,3 (12,245) 0
Earnings Available for Common Stock $262,294 ($44,461) $217,833
</TABLE>
<PAGE>
Exhibit 99.02
<TABLE>
<CAPTION>
New NSP Utility Sub
Unaudited Pro Forma Condensed Balance Sheet
December 31, 1998
(In thousands)
<S> <C> <C> <C> <C>
NSP See Pro Forma Pro Forma
(As Reported)Notes Adjustments
ASSETS
UTILITY PLANT
Electric $7,199,843 2 ($972,442) $6,227,401
Gas 884,182 2 (282,649) 601,533
Other 365,101 2 (81,040) 284,061
Total 8,449,126 (1,336,131) 7,112,995
Accumulated Provision for Depreciation (4,155,641) 2 545,767 (3,609,874)
Nuclear Fuel - Net 101,749 0 101,749
Net Utility Plant 4,395,234 (790,364) 3,604,870
CURRENT ASSETS
Cash and Cash Equivalents 42,364 2 (25,517) 16,847
Accounts Receivable - Net 358,675 2,3,4 (81,067) 277,608
Accrued Unbilled Utility Revenues 139,098 2 (21,011) 118,087
Fossil Fuel Inventories 58,806 2 (12,675) 46,131
Material and Supplies Inventories 110,267 2 (10,942) 99,325
Prepayments and Other 44,855 2 (24,900) 19,955
Total Current Assets 754,065 (176,112) 577,953
OTHER ASSETS
Equity Investments in Nonregulated Projects 862,596 2,3 (862,596) 0
External Decommissioning Fund and Other Investments 479,402 0 479,402
Regulatory Assets 331,940 2 (43,460) 288,480
Nonregulated Property - Net 282,524 2,3 (261,109) 21,415
Intangible Assets and Other 290,536 2 (233,738) 56,798
Total Other Assets 2,246,998 (1,400,903) 846,095
TOTAL ASSETS $7,396,297 ($2,367,379) $5,028,918
LIABILITIES AND EQUITY
CAPITALIZATION
Common Stockholder's Equity $2,481,246 1,2 ($942,524) $1,538,722
Preferred Stockholder's Equity 105,340 2,3 (105,340) 0
Mandatorily Redeemable Preferred Securities of Subsidiary Trust 200,000 2,3 (200,000) 0
Long-Term Debt 1,851,146 2,3 (623,102) 1,228,044
Total Capitalization 4,637,732 (1,870,966) 2,766,766
CURRENT LIABILITIES
Current Portion of Long-Term Debt 369,200 2,3 (16,749) 352,451
Short-Term Debt 239,830 2,3 (181,457) 58,373
Accounts Payable 271,799 2,4 (28,938) 242,861
Taxes Accrued 170,274 2 11,648 181,922
Other Accrued Liabilities 181,159 2 (38,414) 142,745
Total Current Liabilities 1,232,262 (253,910) 978,352
OTHER LIABILITIES
Deferred Income Taxes 814,983 2 (137,299) 677,684
Deferred Investment Tax Credits 128,444 2 (19,573) 108,871
Regulatory Liabilities 372,239 2 (22,073) 350,166
Other Long-Term Obligations and Deferred Income 210,637 2 (63,558) 147,079
Total Other Liabilities 1,526,303 (242,503) 1,283,800
TOTAL LIABILITIES AND EQUITY $7,396,297 ($2,367,379) $5,028,918
</TABLE>
<PAGE>
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EXHIBIT 99.02
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NEW NSP UTILITY SUB
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
1. Just before or at the time the merger is completed, NSP will contribute all
of its utility assets (other than investments in and assets of subsidiaries) to
a newly formed, wholly owned utility operating subsidiary, New NSP Utility Sub,
which will be a Minnesota corporation. At the same time, the new subsidiary will
assume all of NSP's liabilities associated with the assets that it receives
in the contribution. NSP's preferred stock, trust-originated preferred
securities and short-term debt (excluding subsidiary amounts) will remain in
the holding company New Co.
Common stock of New NSP Utility Sub, at a par value and share level which have
not yet been determined, will be wholly owned by the holding company New Co.
The resulting New NSP Utility Sub capitalization will therefore include first
mortgage bonds and other long-term debt associated with utility operations, and
common equity issued to the holding company New Co. (net of adjustments
described in Note 2).
2. The assets, liabilities, equity and results of operations of all subsidiaries
of NSP have been eliminated from consolidated NSP amounts to reflect the
transfer of ownership and control of such subsidiaries to the holding company
New Co. as a result of the merger. New Co.'s equity investment in New NSP
Utility Sub, and the corresponding common equity of New NSP Utility Sub, are
assumed to reflect the reduction in New NSP Utility Sub net assets related to
the transfer of ownership of investments in NSP subsidiaries to the holding
company New Co. as a result of the merger.
3. NSP financing of subsidiary capital and cash flow requirements has been
adjusted to reflect the transfer of such items to the holding company New Co.,
except for immaterial financing of refuse-derived fuel operations previously
transferred to NRG Energy, Inc. 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 merger, NSP-Minnesota 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 the Wisconsin Company pursuant to an interchange agreement with NSP.
Although the interchange pricing and cost sharing arrangements may be
restructured as a result of the merger, at this time the amount of any changes
to interchange power purchases or sales is expected to be immaterial.
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.
5. The allocation between NSP and NCE and their customers of the estimated
cost savings resulting from the merger, net of the costs incurred to achieve
such savings, will be subject to regulatory review and approval. None of these
estimated cost savings, the costs to achieve such savings, or the transaction
costs have been reflected in the pro forma condensed financial statements.
