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, 1999
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
<PAGE>
<TABLE>
<CAPTION>
NORTHERN STATES POWER COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
_________
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
as of December 30, 1999 and 1998
<S> <C> <C>
ASSETS: 1999 1998
------------ ------------
Noninterest-bearing cash $2 $1
Receivables:
Participant contributions
2,780 2,437
Dividends and interest 4,083,162 4,094,137
Interest-bearing cash investments 7,009 2,952
Investment in Northern States Power Company
common stock 224,569,161 317,884,185
----------- -----------
TOTAL ASSETS 228,662,114 321,983,712
----------- -----------
LIABILITIES:
Loans and interest payable to Northern States Power Company 11,749,808 18,705,184
---------- ----------
TOTAL LIABILITIES 11,749,808 18,705,184
NET ASSETS AVAILABLE FOR BENEFITS $216,912,306 $303,278,528
============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NORTHERN STATES POWER COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
_________
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
for the year ended December 30, 1999
<S> <C>
Contributions:
Employers $4,249,862
Participants 29,999
----------------
TOTAL CONTRIBUTIONS 4,279,861
----------------
Investments income (loss):
Earnings on interest-bearing cash 4,149
Dividends on Northern States Power Company common stock 16,261,897
Net gain on sale of assets 5,384,248
Unrealized depreciation of assets (93,507,993)
-----------------
TOTAL INVESTMENT GAIN (LOSS) (71,857,699)
-----------------
Other Deductions:
Benefit payments made directly to participants
or beneficiaries 17,981,109
Interest expense 804,103
Administrative and other 3,172
----------------
TOTAL OTHER DEDUCTIONS 18,788,384
----------------
NET DECREASE (86,366,222)
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 303,278,528
----------------
End of year $216,912,306
================
See accompanying notes to financial statements.
</TABLE>
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
fair value. 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.
Risks and Uncertainties - Because the Plan's assets and income sources are
------------------------
concentrated largely in Company common stock, changes in the values of Company
stock could occur in the near term and such changes could materially affect
participants' account balances and the amounts reported in the Statement of Net
Assets Available for Benefits.
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 - Adopted in 1975, 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, the Company
makes contributions (on behalf of the Companies) 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 loans, as discussed below. Shares purchased with
contributions made by the Company are allocated
Page 3
NORTHERN STATES POWER COMPANY
Employee Stock Ownership Plan
(EIN: 41-0448030 PN: 002)
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 $200,000, as limited
under the Internal Revenue Code 401(a)(17). Since 1977, the Plan has also
provided for voluntary 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 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.
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
loans. 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 whose dividends were used,
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 current market price. Dividends are applied to loan
repayments before any contributions by the Companies are applied.
Plan Termination - There is no specified term for the Plan, and the
-----------------
Employer has not expressed any intent to terminate the Plan. However, the
employer may terminate the Plan at any time in accordance with the provisions of
the Employee Retirement Income Security Act (ERISA).
3. Federal Income Tax
--------------------
The Plan has been determined by the Internal Revenue Service (IRS) 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). 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. The Plan has been amended since
receiving the determination letter. However, the Plan's Administrator believes
that the Plan is currently designed and being operated in compliance with the
applicable requirements of the Internal Revenue Code. Therefore, no provision
for income taxes has been included in the Plan's financial statements.
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.
Through tax year 1999, 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.
Page 4
NORTHERN STATES POWER COMPANY
Employee Stock Ownership Plan
(EIN: 41-0448030 PN: 002)
<TABLE>
<CAPTION>
4. Changes In Unrealized Appreciation (Depreciation) Of Company Common Stock
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fair Market Unrealized
Shares Cost Value Appreciation
---------- ------------ ------------- ------------
Balance, December 30, 1998 11,455,286 $199,573,457 $317,884,185 $118,310,728
Purchases 545,103 12,789,830 12,789,830
Distributions (736,732) (12,596,861) (17,981,109) (5,384,248)
Unrealized depreciation, net of (88,123,745) (88,123,745)
realized appreciation
---------- ------------ ------------ ------------
Balance, December 30, 1999 11,263,657 $199,766,426 $224,569,161 $24,802,735
========== ============ ============ ============
</TABLE>
The fair value per share of the Company's common stock at December 30, 1999
and December 31, 1998 was $19 15/16 and $27 3/4 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, 1999 and 1998 as follows:
<TABLE>
<S> <C> <C> <C> <C>
1999 1998
---- ----
Allocated Unallocated Allocated Unallocated
--------- ----------- --------- -----------
Number of Shares 10,621,725 641,932 10,593,058 862,228
Market Value $211,770,642 $12,798,519 $293,957,359 $23,926,826
Cost $183,733,855 $16,032,571 $176,577,641 $22,995,816
</TABLE>
6. Related Party Transactions
----------------------------
Transactions with the Company - Common stock dividends relate solely to
--------------------------------
Company shares held by the Plan. Receivables include dividends on Company stock
payable to the Plan of $4,083,076 and $4,094,077 at December 30, 1999 and 1998,
respectively. Employer contributions for the 1999 plan year were based on tax
savings realized by the Company.
Loan Payable - In April 1998, September 1996 and March 1995, the Plan
-------------
entered into respective $15,000,000 term loan agreements with the Company as
permitted by the Trust Agreement between the Trustee and the Company. The
proceeds of the loans were used to purchase the Company's common stock. The
Company correspondingly obtained $15,000,000 in unsecured bank loans to finance
the loans to the Plan on a long-term basis. The agreements with the Company
provide for the Plan's loans to be repaid coincidentally with the Company's bank
loans, in quarterly installments over approximately seven years. Loan payments
in the amount of $7,759,478 and $7,030,313 were made during the years ended
December 30, 1999 and 1998, respectively. The loans bear interest at a variable
rate which is adjusted quarterly, based on changes in London Interbank Offered
Rates (LIBOR). At December 30, 1999 the interest rate was 6.4 percent on the
1998 loan, 6.4 percent on the 1996 loan, and 5.8 percent on the 1995 loan.
Page 5
NORTHERN STATES POWER COMPANY
Employee Stock Ownership Plan
(EIN: 41-0448030 PN: 002)
7. Reconciliation of Financial Statements to Form 5500
---------------------------------------------------------
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 the Plan's Form 5500 report 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. At December 30, 1999 and 1998 there were no benefits payable to
withdrawing participants.
Page 6
<PAGE>
NORTHERN STATES POWER COMPANY
Employee Stock Ownership Plan
(EIN: 41-0448030 PN: 002)
ITEM 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT DECEMBER 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
IDENTITY OF ISSUE DESCRIPTION OF INVESTMENT COST CURRENT VALUE
------------------- --------------------------- ---- --------------
*Northern States Power Common Stock - Par $2.50 $199,766,426 $224,569,161
Company
First Bank N.A. First American Institutional
Money Fund 7,009 7,009
----- -----
$199,773,435 $224,576,170
============ ============
*Party in interest to the Plan.
</TABLE>
Page 7
<PAGE>
NORTHERN STATES POWER COMPANY
Employee Stock Ownership Plan
(EIN: 41-0448030 PN: 002)
ITEM 27D - SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE YEAR ENDED
DECEMBER 30, 1999
<TABLE>
<S> <C> <C> <C> <C> <C>
(a) Identity of (b) Description (c) Total Value (d) Total Value (h) Current (i) Net Gain
Party Involved of Transaction of Purchases of Sales Value or (loss)
--------------- --------------- --------------- ---------------- ----------- --------------
Series of Transactions - Security of the Same Issue
-----------------------------------------------------------
Northern States Purchases and Sales of
Power Company NSP Common Stock by
Common Stock the Plan $12,789,830
First Bank N.A. Purchases and sales of
First American
Institutional Money Fund $10,660,465 $10,656,408 $0
Series of Transactions - Same Person
-----------------------------------------
Northern States Northern States Power Co.
Power Company Common Stock Dividends,
Employer Contribution, and
Purchase of Common Stock
from Northern States Power
Company $33,300,516
</TABLE>
Page 8
<PAGE>
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, 1999 and 1998, and the changes in its net assets available for
benefits for the year ended December 30, 1999, 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/
PricewaterhouseCoopers LLP
Minneapolis, Minnesota
June 27, 2000
Page 9
<PAGE>
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/
---------------------------------
Roger D. Sandeen
Vice President and Controller
June 27, 2000 Northern States Power Company
