-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JGAUP3B1HDOvqkVpYziuAbRafpqWAnAoX24bYHvmpHePpgBMUsgyzh9rtEx0FvNQ ZUjDYsdkqj8aKXQYyw339A== 0000072909-96-000009.txt : 19960816 0000072909-96-000009.hdr.sgml : 19960816 ACCESSION NUMBER: 0000072909-96-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTHERN STATES POWER CO /WI/ CENTRAL INDEX KEY: 0000072909 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 390508315 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03140 FILM NUMBER: 96615277 BUSINESS ADDRESS: STREET 1: 100 N BARSTOW ST CITY: EAU CLAIRE STATE: WI ZIP: 54702 BUSINESS PHONE: 7158392621 MAIL ADDRESS: STREET 1: P O BOX 8 CITY: EAU CLAIRE STATE: WI ZIP: 54702-008 10-Q 1 United States SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark one) X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended JUNE 30, 1996 Commission File Number 10-3140 NORTHERN STATES POWER COMPANY, A WISCONSIN CORPORATION, MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H (1) AND (2) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT. Northern States Power Company (Exact name of registrant as specified in its charter) Wisconsin 39-0508315 (State or other jurisdiction of (I.R.S.Employer Identification No.) incorporation or organization) 100 North Barstow Street, Eau Claire, Wisconsin 54703 (Address of principal executive officers) (Zip Code) Registrant's telephone number, including area code (715) 839-2592 NONE Former name, former address and former fiscal year, if changed since last report Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at August 14, 1996 Common Stock, $100 par value 862,000 Shares All outstanding common stock is owned beneficially and of record by Northern States Power Company, a Minnesota corporation. Northern States Power Company (Wisconsin) Statements of Income (Unaudited)
Three Months Ended Six Months Ended June 30 June 30 1996 1995 1996 1995 (Thousands of dollars) Operating revenues Electric.................................................... $88,141 $90,086 $188,501 $186,521 Gas......................................................... 13,537 12,237 51,907 43,795 Total..................................................... 101,678 102,323 240,408 230,316 Operating expenses Fuel for electric generation................................ 819 631 2,600 1,789 Purchased and interchange power............................. 42,903 45,219 90,983 88,803 Gas purchased for resale.................................... 8,138 9,186 34,398 27,207 Other operation............................................. 13,725 12,755 27,959 25,974 Maintenance................................................. 5,381 5,392 9,995 9,285 Administrative and general.................................. 4,715 5,857 10,903 12,428 Depreciation and amortization............................... 8,984 8,191 17,514 16,315 Taxes: Property and general................................. 3,598 3,479 7,246 7,000 Current income tax expense....................... 3,137 2,595 11,038 12,106 Net provision for deferred income taxes.......... 603 (55) 984 922 Net investment tax credit adjustments............ (227) (234) (455) (468) Total..................................................... 91,776 93,016 213,165 201,361 Operating income............................................. 9,902 9,307 27,243 28,955 Other income Other income and deductions - net........................... 107 117 233 274 Allowance for funds used during construction - equity....... 75 64 211 122 Total other income ........................................ 182 181 444 396 Income before interest charges............................... 10,084 9,488 27,687 29,351 Interest charges Interest on long-term debt.................................. 3,962 4,027 7,942 8,038 Other interest and amortization............................. 767 1,238 1,566 2,076 Allowance for funds used during construction - debt......... (77) (38) (172) (184) Total..................................................... 4,652 5,227 9,336 9,930 Net Income .................................................. $5,432 $4,261 $18,351 $19,421 Statements of Retained Earnings (Unaudited) Balance at beginning of period............................... $228,161 $227,390 $221,638 $218,833 Net income for period........................................ 5,432 4,261 18,351 19,421 Net additions.............................................. 5,432 4,261 18,351 19,421 Dividends paid............................................... 6,396 11,603 12,792 18,206 Balance at end of period..................................... $227,197 $220,048 $227,197 $220,048 The Notes to Financial Statements are an integral part of the Statements of Income and Retained Earnings.
Northern States Power Company (Wisconsin) Balance Sheets (Unaudited)
June 30, December 31, 1996 1995 (Thousands of dollars) ASSETS Utility Plant Electric........................................................... $878,085 $864,514 Gas................................................................ 96,520 94,425 Other.............................................................. 65,925 63,758 Total.......................................................... 1,040,530 1,022,697 Accumulated provision for depreciation........................... (381,845) (370,634) Net utility plant.............................................. 658,685 652,063 Other Property and Investments....................................... 9,429 9,218 Current Assets Cash............................................................... 243 247 Accounts receivable - net.......................................... 39,983 43,134 Materials and supplies - at average cost Fuel........................................................... 4,333 6,689 Other.......................................................... 5,429 5,561 Unbilled utility revenues.......................................... 12,257 18,665 Prepayments and other.............................................. 10,728 11,295 Total current assets............................................. 72,973 85,591 Other Assets Unamortized debt expense........................................... 2,713 2,780 Regulatory assets.................................................. 33,423 34,704 Federal income tax receivable...................................... 3,307 3,307 Other.............................................................. 1,332 3,235 Total other assets.............................................. 40,775 44,026 TOTAL ASSETS................................................... $781,862 $790,898 LIABILITIES AND EQUITY Capitalization Common stock - authorized 870,000 shares of $100 par value, issued shares: 1996 and 1995, 862,000......................... $86,200 $86,200 Premium on common stock.......................................... 10,461 10,461 Retained earnings................................................ 227,197 221,638 Total common stock equity...................................... 323,858 318,299 Long-term debt..................................................... 211,552 213,235 Total capitalization........................................... 535,410 531,534 Current Liabilities Notes payable - parent company..................................... 39,300 50,900 Accounts payable................................................... 10,588 14,884 Payable to affiliate companies (principally parent)................ 21,146 13,457 Salaries, wages, and vacation pay accrued.......................... 5,058 6,343 Federal taxes accrued.............................................. (635) 4,111 Other taxes accrued................................................ 1,887 1,537 Interest accrued................................................... 5,078 5,300 Current deferred taxes............................................. 1,946 1,963 Other.............................................................. 8,046 4,177 Total current liabilities...................................... 92,414 102,672 Other Liabilities Accumulated deferred income taxes.................................. 101,000 100,227 Accumulated deferred investment tax credits........................ 20,607 21,205 Regulatory liabilities............................................. 17,931 18,020 Customer advances.................................................. 6,880 6,458 Benefit obligations and other...................................... 7,620 10,782 Total other liabilities........................................ 154,038 156,692 TOTAL LIABILITIES AND EQUITY................................. $781,862 $790,898 The Notes to Financial Statements are an integral part of the Balance Sheets.
Northern States Power Company (Wisconsin) Statements of Cash Flows (Unaudited)
Six Months Ended June 30 1996 1995 (Thousands of dollars) Cash Flows from Operating Activities: Net Income....................................... $18,351 $19,420 Adjustments to reconcile net income to cash from operating activities: Depreciation and amortization.................. 17,947 16,960 Deferred income taxes.......................... 0 665 Deferred investment tax credit recognized...... (455) (468) Allowance for funds used during construction - equity........................ (211) (122) Decrease in insurance receivable............... 1,615 Cash provided from changes in working capital.... 13,559 17,956 Cash used for changes in other assets and liabilities................................ (1,048) (630) Net cash provided from operating activities 48,143 55,396 Cash Flows from Investing Activities: Capital expenditures............................. (24,137) (17,164) Increase (decrease) in construction related accounts payable............................... 413 (473) Allowance for funds used during construction - equity.......................... 211 122 Other............................................ (242) (1,219) Net cash used for investing activities (23,755) (18,734) Cash Flows from Financing Activities: Repayment of short-term debt..................... (11,600) (15,000) Redemption of long-term debt..................... 0 (3,375) Dividends paid................................... (12,792) (18,206) Net cash used for financing activities (24,392) (36,581) Net increase (decrease) in cash and cash equivalents (4) 81 Cash and cash equivalents beginning of period....... 247 61 Cash and cash equivalents end of period............. $243 $142 The Notes to Financial Statements are an integral part of the Statements of Cash Flows.
Northern States Power Company (Wisconsin) NOTES TO FINANCIAL STATEMENTS The Company is a wholly owned subsidiary of Northern States Power Company, a Minnesota corporation (NSPM). In the opinion of management, the accompanying unaudited financial statements contain all adjustments necessary to present fairly the financial position of Northern States Power Company, a Wisconsin corporation, (the Company) as of June 30, 1996 and Dec. 31, 1995, the results of its operations for the three and six months ended June 30, 1996 and 1995 and its cash flows for the six months ended June 30, 1996 and 1995. Due to the seasonality of the Company's electric and gas sales, operating results on a quarterly and year-to-date basis are not necessarily an appropriate base from which to project annual results. The accounting policies followed by the Company are set forth in Note 1 to the Company's financial statements in its Annual Report on Form 10-K for the year ended Dec. 31, 1995 (Form 10-K). The following notes should be read in conjunction with such policies and other disclosures in the Form 10-K. Certain reclassifications have been made to 1995 financial information to conform with the 1996 presentation. These reclassifications had no effect on net income as previously reported. 1. Accounting Change - Gas Costs While fixed costs (demand charges) from gas suppliers and transporters are incurred fairly evenly throughout the year, such costs are recovered in customer rates on a per unit basis (using average annual costs per unit), primarily in the winter heating season when sales volumes are highest. Also, the energy price of gas purchased (excluding demand charges) can vary from estimated levels included in customer rates. As a result, gas costs for both demand and energy charges are incurred throughout the year at a different time than when such costs are recovered from customers. The purchased gas adjustment (PGA) clause allows customer rates to be adjusted periodically to ensure full recovery of all gas costs incurred. Effective Jan. 1, 1996, the Company changed its method of accounting for the regulatory effects of costs recovered through the PGA rate adjustment clause. Previously, the Company expensed gas costs as incurred. Beginning in 1996, the cost of gas expensed is adjusted to equal the level of cost recovery in customer rates, with such adjustments being reflected as regulatory deferrals on the balance sheet. This accounting change results in a better matching of revenues and expenses, and conforms to the cost recognition method used by NSPM. This change affects the timing of expense recognition within the year but will not change total annual gas expense for 1996 or any prior years. The effect of the change on second quarter 1996 results was a decrease in gas costs recognized and an increase in pre-tax operating income of approximately $3.1 million, and an increase in net income of $1.9 million. The effect of the change on the first six months 1996 results was an increase in gas costs recognized and a decrease in pretax operating income of approximately $3.4 million, and a decrease in net income of $2.0 million. Consistent with accounting requirements, prior year quarterly results have not been restated for this change. Had the change been implemented as of Jan. 1, 1995, the effect of the change on second quarter 1995 results would have been a decrease in gas costs recognized and an increase in pretax operating income of approximately $1.2 million, and an increase in net income of $0.7 million. The effect of the change on the first six months of 1995 results would have been an increase in gas costs recognized and a decrease in pretax operating income of approximately $2.5 million, and a decrease in net income of $1.5 million. 2. Proposed Business Combination On April 28, 1995, NSPM and Wisconsin Energy Corporation (WEC) entered into an Agreement and Plan of Merger (the Merger Agreement), which provides for a strategic business combination involving NSPM, WEC and the Company to form a registered utility holding company, which will be known as Primergy Corporation (Primergy). See further discussion of the proposed business combination in the 1995 Form 10-K and Part II, Item 5-Other Information of this report. The 1996 developments related to merger filings made in 1995 are discussed below. The goal of NSPM and WEC is to receive approvals from all required regulatory authorities by the end of 1996. However, there is a possibility (as discussed below) that, unless NSPM and the Company are able to settle the issues prior to that time, all necessary regulatory approvals may not be obtained until the first quarter of 1997, and as a result, the merger may not be consummated until the first quarter of 1997. In July 1995, WEC and NSPM filed an application and supporting testimony with the Federal Energy Regulatory Commission (FERC) seeking approval of the Merger Agreement. The FERC has put the merger application on an accelerated schedule, ordering the administrative law judge's initial decision by August 30, 1996. On May 28, 1996, WEC and NSPM filed additional evidence with the FERC, providing a detailed analysis of generation "market power" and more specific information about the independent system operator (ISO) proposal originally included in the merger application. This additional information was provided to the FERC in response to concerns raised by intervenors in the merger proceeding and by the FERC staff. The FERC asked for an analysis of "market power" or Primergy's potential ability to manipulate its generation to raise prices or cause transmission constraints. WEC and NSPM have continued to work with the FERC staff and other parties on the ISO proposal and anticipate that the FERC will act on the merger application in the fourth quarter of 1996. On April 5, 1996, WEC and NSPM submitted the initial filing to the Securities and Exchange Commission to facilitate registration of Primergy under the Public Utility Holding Company Act of 1935, as amended. On April 10, 1996, the Michigan Public Service Commission approved the merger application through a settlement agreement containing terms consistent with the merger application. On June 26, 1996, the North Dakota Public Service Commission approved the merger application. These state commission approvals represent two of the four states where approval of the merger is required. On July 24, 1996, the Public Service Commission of Wisconsin (PSCW) held a prehearing conference on the merger proceeding. At the prehearing conference the parties agreed upon an extensive issues list and a schedule for the hearing. The schedule required staff and intervenor case filings on Sept. 9, 1996, applicants rebuttal filing on Sept. 20, 1996, and three weeks of hearings commencing on Sept. 24, 1996. At its open meeting on August 8, 1996, the Commission decided to delay this schedule by one month. The resulting schedule should lead to a PSCW decision on the merger in late 1996 or early 1997 and a written order in the first quarter of 1997. In June 1996, the Minnesota Public Utilities Commission (MPUC) issued an order which established the procedural framework for the MPUC's consideration of the merger. The issues of merger-related savings, electric rate freeze characteristics, NSPM's pre-merger revenue requirements, Primergy's ability to control the transmission interface between the Mid-Continent Area Power Pool and the Wisconsin and upper Michigan area, and the impact of this interface on Minnesota utilities were set for contested case hearings. On August 5, 1996 a Minnesota administrative law judge issued a Pre-Hearing Order which set the evidentiary hearing dates from Nov. 18 through Dec. 6, 1996. If the MPUC approvals proceed on these hearing dates without settlement, the MPUC's decision may not be obtained until the first quarter of 1997. Later in 1996, WEC and NSPM will also file required notifications with the Federal Trade Commission and the Department of Justice under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The merger filings, with each state, included a request for deferred accounting treatment and rate recovery of costs incurred associated with the proposed merger. At June 30, 1996, the Company had incurred approximately $358,000 of costs associated with the proposed merger which have been deferred as a component of Other Deferred Debits. 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. 3. Rate Matters There were no changes in any of the Company's jurisdictions' rates since the Form 10-K was filed. The technical hearings for the electric and gas stand alone rate cases, based on a 1997 pre-merger test year, were held before the PSCW on July 8, 1996. The Company had requested changes to electric rates for various classes of customers which would have an offsetting effect on overall revenues. The Company had requested no changes to gas rates. There were no parties to the proceeding that recommended a change to electric or gas rates that would impact total revenues. The Company expects a rate order later this year. 4. Commitments and Contingent Liabilities As discussed in Note 8 to the Financial Statements in the 1995 Form 10-K, the Company is involved in contamination at a site in Ashland, Wisconsin. With respect to developments since the 1995 Form 10-K was filed, during 1996 the Wisconsin Department of Natural Resources (WDNR) has recently completed a sediment contamination investigation of the impacted area of Chequamegon Bay portion of the Ashland site to determine the extent and nature of contamination. Contamination of the near shore area has been confirmed by the study. WDNR's consultant is now preparing a remedial option study for the Chequamegon Bay portion of the site. At June 30, 1996, the Company had recorded an estimated liability of $900,000 for future remediation costs at this site. To date the Company has incurred approximately $500,000 in actual expenditures. Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION Discussion of financial condition and liquidity is omitted per conditions set forth in general instructions H (1) and (2) of Form 10-Q for wholly-owned subsidiaries (reduced disclosure format). On April 28, 1995, NSPM and WEC entered into an Agreement and Plan of Merger which provides for a strategic business combination involving the two companies in a "merger-of-equals" transaction. See Note 2 to the Financial Statements and Part II of this report. The Company's net income for the quarter ended June 30, 1996 was $5.4 million. Net income increased $1.2 million from the comparable period a year ago. Except for the historical statements contained herein, the matters discussed in the following discussion and analysis, including the statements regarding the anticipated impact of the proposed merger, are forward looking statements that are subject to certain risks, uncertainties and assumptions. Such forward- looking statements are intended to be identified in this document by the words "anticipate", "estimate", "expect", "objective" and similar expressions. 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 NSPM and WEC; and the other risk factors listed in Exhibit 99.01 to this report on Form 10-Q for the quarter ended June 30, 1996. Second Quarter 1996 Compared with Second Quarter 1995 Electric revenues for the second quarter 1996 decreased $1.9 million or 2.2% from the electric revenues for the second quarter 1995. Electric sales decreased 0.9% in 1996 from 1995, with the majority of the decrease due to favorable weather in 1995 which did not recur, partially offset by customer and load growth. Gas revenues increased $1.3 million or 10.6% in the second quarter 1996 compared to the second quarter 1995. Gas sales for the second quarter of 1996 were 13.1% higher than those in the comparable quarter 1995. Contributing to the increase was the impacts of colder weather in 1996 relative to 1995 and the gas rate increase effective Jan. 1, 1996, as discussed in the Rate Matters Jurisdiction section of the 1995 Form 10-K. Fuel for electric generation and Purchased and interchange power combined for a net decrease of $2.1 million or 4.6% due in part to decreased generation to meet sales requirements and to lower operating costs charged to the Company by NSPM. Gas purchased for resale decreased $1.0 million, representing the net effects of a $2.1 million increase as a result of higher gas sales and a decrease of $3.1 million as a result of the change in accounting for gas costs as discussed in Note 1 of the Notes to the Financial Statements in this report. Other operation, Maintenance and Administrative and general expenses together decreased $0.2 million primarily as a result of decreases in employee benefit expenses. Depreciation and amortization increased $0.8 million in the second quarter 1996 over the same quarter of 1995 due to increases in the Company's plant in service. Property and general taxes were approximately the same in both periods. Income tax expense of the second quarter 1996 is up $1.2 million as compared to the second quarter 1995 mainly due to a higher level of pre-tax income in the second quarter 1996. Other income and deductions was about the same in both periods. Interest expense decreased $0.6 million due to interest related to tax assessments in 1995. First Six Months of 1996 Compared with First Six Months of 1995 Electric revenues for the first six months of 1996 increased $2.0 million or 1.1% from the electric revenues for the same period of 1995. Electric sales increased 2.2% in 1996 from 1995, with the majority of the increase due to the comparably colder temperatures in 1996 and the remainder due to customer and load growth. Gas revenues increased $8.1 million or 18.5% for the first six months of 1996 compared to the same period of 1995. Gas sales increased 15.2% in 1996 from 1995 due to colder winter weather and sales growth. Also contributing to the increased revenues was the gas rate increase effective Jan. 1, 1996, as discussed in the Rate Matters Jurisdiction section of the 1995 Form 10-K. Fuel for electric generation and Purchased and interchange power together increased $3.0 million or 3.3% primarily due to increased generation and interchange purchases from NSPM to meet sales requirements. Gas purchased for resale increased $7.2 million or 26.4%, with $3.8 million of the increase as a result of higher gas sales and the remaining increase of $3.4 million as a result of the change in accounting for gas costs as discussed in Note 1 of the Notes to the Financial Statements in this report. Other operation, Maintenance and Administrative and general expenses together increased $1.2 million primarily as a result of increased spending in the production and transmission area and increased maintenance and operation expenses in the distribution area, partially offset by decreases in employee benefit expenses. Depreciation and amortization increased $1.2 million in 1996 over 1995 due to increases in the Company's plant in service. Property and general taxes increased $0.2 million primarily due to an increase in gross receipts taxes as a result of increased revenue. Income tax expense for the first six months of 1996 is down $1.0 million as compared to 1995 due mainly to a lower level of pre-tax income in 1996. Other income and deductions was about the same in both periods. Interest expense decreased $0.6 million due to interest related to tax assessments in 1995. Part II. OTHER INFORMATION Item 1. Legal Proceedings In June 1996, the Landfill Remediation Trust filed suit in the U.S. District Court for the Western District of Wisconsin seeking to establish liability for and contributions from parties at the Junker landfill in Hudson, Wisconsin. NSPM and the Company are among over 600 parties sued in connection with this landfill. The Company does not believe the liability, if any, will be material. Item 5. Other Information MERGER AGREEMENT WITH WISCONSIN ENERGY CORPORATION As previously reported in the Company's Current Report on Form 8-K, dated May 8, 1995, and filed on May 8, 1995, and the 1995 Form 10-K, NSPM and WEC have entered into a Merger Agreement which provides for a strategic business combination involving NSPM and WEC in a "merger-of-equals" transaction (Transaction). In connection with the Transaction, the Company will be merged into WEC's principal utility subsidiary, Wisconsin Electric Power Company (WE), which will be renamed "Wisconsin Energy Company." Prior to the merger of the Company into Wisconsin Energy Company, a new successor company to NSPM, Northern Power Wisconsin Corp. (New NSP), will acquire from the Company certain gas utility properties and operations in La Crosse and Hudson, Wisconsin with a net historical cost at June 30, 1996 of approximately $17.9 million. Detailed information with respect to the Merger Agreement and the proposed Transaction is contained in the 1995 Annual Reports on Form 10-K of NSPM and the Company and in the Joint Proxy Statement/Prospectus dated August 7, 1995 relating to the meetings of the stockholders of WEC and NSPM to vote on the Merger Agreement and related matters. SUMMARIZED PRO FORMA FINANCIAL INFORMATION (UNAUDITED) The following summary of unaudited pro forma financial information combines historical balance sheet and income statement information of WEC and NSPM, and of WE and the Company, to give effect to the Transaction to form Primergy and Wisconsin Energy Company, respectively. The unaudited pro forma balance sheet information gives effect to the Transaction as if it had occurred at June 30, 1996. The unaudited pro forma income statement information gives effect to the Transaction as if it had occurred at Jan. 1, 1996. This pro forma information was prepared from the historical financial statements of NSPM, WEC and WE and the Company on the basis of accounting for the Transaction as a pooling of interests and should be read in conjunction with such historical financial statements and related notes thereto. The allocation between Wisconsin Energy Company and New NSP and their customers of the estimated cost savings resulting from the Transaction, net of the costs incurred to achieve such estimated cost savings, will be subject to regulatory review and approval. None of the estimated cost savings, the costs to achieve such savings, nor transaction costs are reflected in the summarized unaudited pro forma income statement information. With the exception of certain non-current deferred tax balance sheet reclassifications described below, all other financial statement presentation and accounting policy differences are immaterial and have not been adjusted in the unaudited pro forma financial information. The following information is not necessarily indicative of the financial position or operating results that would have occurred had the Transaction been consummated on the date or at the beginning of the period for which the Transaction is being given effect nor is it necessarily indicative of future operating results or financial position. Primergy Information The following summarized Primergy unaudited pro forma financial information reflects the combination of the historical financial statements of WEC and NSPM after giving effect to the Transaction to form Primergy. A pro forma adjustment has been made to conform the presentations of non-current deferred income taxes in the summarized unaudited pro forma combined balance sheet information as a net liability. The unaudited pro forma combined earnings per common share reflect pro forma adjustments to average NSPM common shares outstanding in accordance with the provisions of the Merger Agreement, whereby each outstanding share of NSPM common stock will be converted into 1.626 shares of Primergy common stock. In the Transaction, each outstanding share of WEC common stock will remain outstanding as a share of Primergy common stock. Unaudited Pro Forma PRIMERGY CORP: NSPM WEC Combined (in millions, except per share amounts) As of June 30, 1996: Utility Plant-Net $4,324 $2,914 $7,238 Current Assets 801 487 1,288 Other Assets * 1,276 1,151 2,281 Total Assets $6,401 $4,552 $10,807 Common Stockholders' Equity $2,074 $1,897 $3,971 Preferred Stockholders' Equity 240 30 270 Long-Term Debt 1,666 1,359 3,025 Total Capitalization 3,980 3,286 7,266 Current Liabilities 1,014 382 1,396 Other Liabilities * 1,407 884 2,145 Total Equity & Liabilities $6,401 $4,552 $10,807 For the Six Months Ended June 30, 1996: Utility Operating Revenues $1,311 $897 $2,208 Utility Operating Income $160 $154 $314 Net Income, after Preferred Dividend Requirements $104 $108 $212 Earnings per Common Share: As reported $1.53 $.98 -- NSPM Equivalent Shares -- -- $1.56 Primergy Shares -- -- $.96 * Includes a $146 million pro forma adjustment to conform the presentation of non-current deferred taxes as a net liability. Wisconsin Energy Company Information The following summarized Wisconsin Energy Company unaudited pro forma financial information combines historical balance sheet and income statement information of WE and the Company to give effect to the Transaction, including the transfer of certain gas utility properties from the Company to New NSP. The unaudited pro forma income statement information does not reflect adjustments for 1996 year to date revenues of $21.6 million and related expenses associated with the transfer of certain gas utility properties and operations from the Company to New NSP. A pro forma adjustment has been made to conform the presentation of non-current deferred income taxes in the summarized unaudited pro forma combined balance sheet information as a net liability. Wisconsin Energy Company: ** Unaudited The Pro Forma WE Company Combined (as Reported) (as Reported) *** (Millions of Dollars) As of June 30, 1996: Utility Plant-Net $2,914 $659 $3,553 Current Assets 474 73 563 Other Assets * 911 50 819 Total Assets $4,299 $782 $4,935 Common Stockholder's Equity $1,720 $324 $2,044 Preferred Stockholder's Equity 30 -- 30 Long-Term Debt 1,318 212 1,530 Total Capitalization 3,068 $536 3,604 Current Liabilities 360 92 452 Other Liabilities * 871 154 879 Total Equity & Liabilities $4,299 $782 $4,935 For the Six Months Ended June 30, 1996: Utility Operating Revenues $897 $240 $1,137 Utility Operating Income $154 $27 $181 Net Income, after Preferred Dividend Requirements $107 $18 $125 * Includes a $142 million pro forma adjustment to conform the presentation of non-current deferred taxes as a net liability. ** In connection with the Merger Agreement, WE will be renamed Wisconsin Energy Company. *** Includes a pro forma adjustment for the transfer of certain gas properties from the Company to New NSP. Note: Earnings per share of common stock are not applicable because all of the Wisconsin Energy Company common stock will be owned by Primergy. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits The following exhibit is filed with this report: 27.01 Financial Data Schedule for the six months ended June 30, 1996 99.01 Statement pursuant to Private Securities Litigation Reform Act of 1995. (b) Reports on Form 8-K None 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 thereunto duly authorized. NORTHERN STATES POWER COMPANY (Registrant) /s/ David E. Ripka Controller (Principal Accounting Officer) /s/ Neal Siikarla Treasurer (Principal Financial Officer) Date: August 14, 1996 EXHIBIT INDEX Method of Exhibit Description Filing No. DT 27.01 Financial Data Schedule DT 99.01 Statement pursuant to Private Securities Litigation Reform Act of 1995 DT = Filed electronically with this direct transmission. EX-27 2
UT EXHIBIT 27.01 This schedule contains summary financial information extracted from the Statements of Income, Balance Sheets and Statements of Cash Flows and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS DEC-31-1995 JUN-30-1996 PER-BOOK 658,685 9,429 72,740 40,775 0 781,629 86,200 10,461 227,197 323,858 0 0 211,552 39,300 0 0 0 0 0 0 206,919 781,629 240,408 11,566 201,599 213,165 27,243 444 27,687 9,336 18,351 0 18,351 12,792 7,942 48,143 $21.29 $21.29
EX-99 3 EXHIBIT 99.01 Northern States Power Company Cautionary Factors The Private Securities Litigation Reform Act of 1995 (the Act) provides a new "safe harbor" for forward-looking statements to encourage such disclosures without the threat of litigation providing those statements are identified as forward-looking and are accompanied by meaningful, cautionary statements identifying important factors that could cause the actual results to differ materially from those projected in the statement. Forward- looking statements have been and will be made in written documents and oral presentations of Northern States Power Company, a Wisconsin corporation (the Company). Such statements are based on management's beliefs as well as assumptions made by and information currently available to management. When used in the Company's documents or oral presentations, the words "anticipate", "estimate", "expect", "objective" and similar expressions are intended to identify forward-looking statements. In addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements, factors that could cause the Company's actual results to differ materially from those contemplated in any forward-looking statements include, among others, the following: - - Economic conditions including inflation rates and monetary fluctuations; - - Trade, monetary, fiscal, taxation, and environmental policies of governments, agencies and similar organizations in geographic areas where the Company has a financial interest; - - Customer business conditions including demand for their products or services and supply of labor and materials used in creating their products and services; - - Financial or regulatory accounting principles or policies imposed by the Financial Accounting Standards Board, the Securities and Exchange Commission, the Federal Energy Regulatory Commission and similar entities with regulatory oversight; - - Availability or cost of capital such as changes in: interest rates; market perceptions of the utility industry, or the Company; or security ratings; - - Factors affecting operations such as unusual weather conditions; catastrophic weather-related damage; unscheduled generation outages, maintenance or repairs; unanticipated changes to fossil fuel or gas supply costs or availability due to higher demand, shortages, transportation problems or other developments; environmental incidents; or electric transmission or gas pipeline system constraints; - - Employee workforce factors including loss or retirement of key executives, collective bargaining agreements with union employees, or work stoppages; - - Increased competition in the utility industry, including: industry restructuring initiatives; transmission system operation and/or administration initiatives; recovery of investments made under traditional regulation; nature of competitors entering the industry; retail wheeling; a new pricing structure; and former customers entering the generation market; - - Rate-setting policies or procedures of regulatory entities, including environmental externalities, which are values established by regulators assigning environmental costs to each method of electricity generation when evaluating generation resource options; - - Social attitudes regarding the utility and power industries; - - Cost and other effects of legal and administrative proceedings, settlements, investigations and claims; - - Technological developments that result in competitive disadvantages and create the potential for impairment of existing assets; - - Numerous matters associated with the proposed combination of Northern States Power Company, a Minnesota corporation (NSPM) and Wisconsin Energy Corporation to form Primergy Corporation (Primergy), including: - Regulatory authorities' decisions regarding business combination issues including the approval of the business combination as proposed, the rate structure of utility operating companies after the merger, transmission system operation and administration, or divestiture of gas utility or non-regulated portions of NSPM's business; - Qualification of the transaction as a pooling of interests; - Factors affecting the anticipated cost savings including national and regional economic conditions, national and regional competitive conditions, inflation rates, weather conditions, financial market conditions, and synergies resulting from the business combination; - Allocation of benefits of cost savings between shareholders and customers, which will depend, among other things, upon the results of regulatory proceedings in various jurisdictions; - Regulation of Primergy as a registered public utility holding company and other different or additional federal and state regulatory requirements or restrictions to which Primergy and its subsidiaries may be subject as a result of the business combination (including conditions which may be imposed in connection with obtaining the regulatory approvals necessary to consummate the business combination, such as the possible requirement to divest gas utility and possibly certain non-regulated operations); - Factors affecting dividend policy including results of operations and financial condition of Primergy and its subsidiaries and such other business considerations as the Primergy Board of Directors considers relevant. - - Other business or investment considerations that may be disclosed from time to time in the Company's Securities and Exchange Commission filings or in other publicly disseminated written documents. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The foregoing review of factors pursuant to the Act should not be construed as exhaustive or as any admission regarding the adequacy of disclosures made by the Company prior to the effective date of the Act. -----END PRIVACY-ENHANCED MESSAGE-----