-----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, MXkoN0lIvPcboGCT7c6nxqJI6FRNJLqJbX8Oitw/K2cN9UAtCwCauwutbOt92Nie NJaUzLjHwsvG/h/XfRYHmA== 0000072909-95-000010.txt : 19951119 0000072909-95-000010.hdr.sgml : 19951119 ACCESSION NUMBER: 0000072909-95-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: AMEX 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: 95592728 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 SEPTEMBER 30, 1995 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 (State or other jurisdiction ofincorporation or organization 39-0508315 (I.R.S.Employer Identification No.) 100 North Barstow Street, Eau Claire, Wisconsin 54702 (Address of principal executive officers) (Zip Code) Registrant's telephone number, including area code (715) 839-2621 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 September 30, 1995 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) NOTES TO FINANCIAL STATEMENTS In the opinion of management, the accompanying unaudited financial statements contain all adjustments necessary to present fairly the Northern States Power Company's, a Wisconsin corporation, (The Company's) financial position as of September 30, 1995, and December 31, 1994, the results of its operations for the three and nine months ended September 30, 1995 and 1994 and its cash flows for the nine months ended September 30, 1995 and 1994. 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 December 31, 1994, (The Form 10-K). The following notes should be read in conjunction with such policies and other disclosures in the Form 10-K. 1. Proposed Business Combination The Company is a wholly owned subsidiary of Northern States Power Company, a Minnesota corporation (NSPM). On April 28, 1995, NSPM and Wisconsin Energy Corporation (WEC) entered into an Agreement and Plan of Merger (the Merger Agreement). As a result, a registered utility holding company, which will be known as Primergy Corporation (Primergy), will be the parent of NSPM and the current operating subsidiaries of NSPM and WEC. Each outstanding share of common stock of NSPM will be converted into 1.626 shares of common stock of Primergy and each outstanding share of common stock of WEC will remain outstanding as one share of common stock of Primergy. The business combination is intended to be tax-free for income tax purposes, and to be accounted for as a pooling of interests. The Agreement is subject to various conditions, including approval of the stockholders of NSPM and WEC, and the approval of various regulatory agencies. The Company anticipates that the completion of the regulatory review and approval process will take approximately 12-18 months and, accordingly, the completion of this business combination is not anticipated until late 1996. Item 5 of Part II of this report provides additional information regarding the proposed transaction. 2. Rate Matters There were no changes in any of the Company's jurisdictions' rates since the Form 10-K was filed. However, by the end of the third quarter of 1995, six of our wholesale customers signed power and energy supply agreements with various rate discounts for commitments ranging in length from five to ten years. On June 1, 1995, the Company filed with the Public Service Commission of Wisconsin (PSCW) for a $2.7 million increase in natural gas rates and no change in electric rates to be effective January 1, 1996. On October 6, 1995, the PSCW ordered a $4.8 million decrease, or approximately 1.7 percent, on an annual basis in the Company's retail electric rates. The new rates will take effect January 1, 1996. A decision regarding the gas retail rate increase is expected by the end of the year. In mid-October, as part of the Wisconsin Public Service Commission's generic docket O5-EI-114, an advisory committee completed a set of recommendations regarding restructuring the electric industry in the state. Currently, the Commission is reviewing the recommendations and will issue a decision in December. Item 2. Management's Discussion and Analysis of Results of Operations 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 Part II of this report. The Company's net income for the third quarter and nine months ended September 30, 1995 was $6.0 million and $25.5 million respectively. Net income increased $1.2 million for the third quarter and decreased $1.2 million for the nine months ended September 30 from the comparable periods a year ago. THIRD QUARTER 1995 AS COMPARED WITH THIRD QUARTER 1994 Electric revenues for the third quarter of 1995 increased $5.4 million (5.9 percent) from the electric revenues for the third quarter of 1994. Electric sales increased 7.6% in the third quarter of 1995 as compared with the third quarter of 1994 with the majority of the increase due to the comparably warm temperatures in August 1995 and the remainder due to customer and load growth. Gas revenues decreased $1.5 million (16.5 percent) in the third quarter of 1995 compared to the third quarter 1994. Although gas sales for the third quarter of 1995 were 1.9% higher than those in the comparable quarter of 1994, this was offset by a lower purchased gas expense. This lower purchased gas expense is reflected in the purchased gas adjustment and decreases gas revenues. The purchased gas adjustment is further defined in the Fuel and Purchased Gas Adjustment Clauses section of the Company's 1994 Report on Form 10-K. Operating expenses increased $3.3 million in the third quarter of 1995 as compared to the third quarter of 1994. Contributing to the increase of $3.3 million are the following items: Fuel for electric generation expenses increased $0.5 million due to increased generation at our French Island, Wheaton, and Bayfront generating facilities. Purchased and interchange power increased $0.4 million as a result of higher purchased power expenses in 1995 due to higher contracted demand expense. Gas purchased for resale decreased $0.4 million as a result of a lower per unit cost of purchased gas. Administrative and general costs decreased $0.7 million due primarily to decreased labor costs. Other operation costs increased $0.4 million as a result of increased spending in the steam and hydro operating facilities. Maintenance expense decreased $0.9 million due to decreased spending in the steam and distribution facilities. Depreciation increased $0.5 million in the third quarter of 1995 over the same quarter of 1994 from increases in the Company's plant in service. Property and general taxes increased $0.1 million primarily due to increased plant in service in the State of Wisconsin. Income tax expense of the third quarter of 1995 is up $3.4 million as compared to the third quarter of 1994. This reflects a higher level of earnings in the third quarter of 1995 and is also partially due to adjustments made in the third quarter of 1994 decreasing current tax expense resulting from the updating of the status of the estimated income tax payments expected to be incurred as a result of unaudited tax years. Other income and deductions increased $0.1 million primarily as a result of increases in subsidiary company earnings. Interest expense decreased $0.5 million in as a result of the recognition of interest payable on state income tax issues in the third quarter of 1994. FIRST NINE MONTHS OF 1995 AS COMPARED WITH THE FIRST NINE MONTHS OF 1994 Electric revenues for the nine months ended September 30, 1995 increased $2.7 million (1.0 percent) from nine months ended September 30, 1994. Electric sales were 3.0% higher in the nine months ended September 30, 1995 as compared to the same period a year ago. This is primarily due to the warm temperatures experienced in the summer of 1995 in relation to the summer of 1994. In addition, the increase in electric revenues for the nine months ended September 30, 1995 as compared to the same period a year ago were offset by a $2.5 million decrease in other operating revenue. Other operating revenues consist primarily of charges billed to Northern States Power Company, a Minnesota Corporation (Minnesota Company) through the Interchange Agreement. The Interchange Agreement is a cost-sharing arrangement between the Company and the Minnesota Company in which electric generation and transmission costs for the combined systems of the two companies are shared. This $2.5 million decrease is a result of less generation being performed by the Company compared to the Minnesota Company. Gas revenues decreased $2.8 million (5.1 percent) in the first nine months of 1995 compared to the same period in 1994. Again, although the gas sales for the first nine months of 1995 were higher than those in the same period of 1994, the cost of gas was 7 percent a DKT lower than that in 1994. This lower gas cost is reflected in the purchased gas adjustment and decreases gas revenues. Operating expenses decreased $.1 million for the nine months ended September 30, 1995 in relation to the same period for 1994. Contributing to the $0.1 million decrease are the following items: Fuel for electric generation costs were down $0.5 million for the nine months ended September 30, 1995 as compared to the same period in 1994. This decrease resulted from lower amounts of generation at the Company in comparison to the Minnesota Company and from lower costs incurred at some generation facilities. Purchased and interchange power increased $1.8 million as a result of increased charges billed to the Company from the Minnesota Company through the Interchange Agreement. The increased charges are as a result of purchasing more generation from the Minnesota Company and partially due to the increased costs of the Minnesota Company. NSPM had increases in fuel expenses as a result of increased sales and higher 1995 generation levels. Purchase power expenses increased due to higher electric demand costs and wind energy purchases, partly offset by lower cost of other energy purchases due to market conditions. Gas purchased for resale is down 8.3%, $3.3 million for the first three quarters of 1995 in comparison to the first three quarters of 1994. Of the $3.3 million deviation, approximately $2.5 million is due to the lower cost of gas and $0.6 million is due to lower transportation charges. Administrative and general costs decreased $2.5 million due to a decrease in labor costs and due to the reclassification of association dues to the functional operating areas. Other operation costs increased $1.2 million due to increases in the steam and distribution operating functions. Maintenance expense for the nine months ended September 30, 1995 was $1.4 million less than the same period last year. Of this deviation, $1.3 million related to maintenance in the hydro and transmission areas. Depreciation increased $1.7 million between 1995 and 1994 as a result of added plant in service. Property and general taxes increased $0.2 million primarily due to increased plant in service in the State of Wisconsin. Income tax expense increased $2.8 million partially due to adjustments made in the third quarter of 1994 decreasing current tax expense resulting from the updating of the status of the estimated income tax payments expected to be incurred as a result of unaudited tax years. Other income and deductions increased $0.3 million primarily as a result of increases in subsidiary company earnings. Interest expense increased $1.0 million in as a result of write- offs of previously capitalized interest expense and also partially due to increases in both the interest rate and the level of short-term debt between 1995 and 1994. PART II. OTHER INFORMATION Item 5. Other Information Proposed Business Combination As previously reported in Northern States Power Company's, a Wisconsin corporation, Current Report on Form 8-K, dated May 8, 1995, and filed on May 8, 1995, and Quarterly Reports on Form 10-Q for the quarters ended March 31 and June 30, 1995, Northern States Power Company, a Minnesota corporation, (NSPM), Wisconsin Electric Corporation, (WEC), New NSP, and WEC Sub, have entered into an Agreement and Plan of Merger (the Merger Agreement), which provides for a strategic business combination involving NSP and WEC in a merger-of-equals transaction (the Transaction). The Transaction, which was approved by the shareholders of the constituent companies at meeting held on September 13, 1995, is expected to close shortly after all of the conditions to the consummation of the Transaction, including obtaining applicable regulatory approvals, are met or waived. The regulatory approval process is expected to take approximately 12 to 18 months from April 28, 1995. In the Transaction, the holding company of the combined enterprise will be registered under the Public Utility Holding Company Act of 1935, as amended. The holding company will be named Primergy Corporation (Primergy) and will be the parent company of both NSPM (which, for regulatory reasons, will reincorporate in Wisconsin) and of WEC's present principal utility subsidiary, Wisconsin Electric Power Company (WEPCO) which will be renamed Wisconsin Energy Company. It is anticipated that, following the Transaction, Northern States Power Company, a Wisconsin corporation, will be merged into Wisconsin Energy Company and that NSPM's other subsidiaries will become subsidiaries of Primergy. As noted above, pursuant to the Transaction, NSPM will reincorporate in Wisconsin for regulatory reasons. This reincorporation will be accomplished by the merger of NSPM into New NSP, with New NSP being the surviving corporation and succeeding to the business of NSPM as an operating public utility. Following such merger, WEC Sub will be merged with and into New NSP, with New NSP being the surviving corporation and becoming a subsidiary of Primergy. Both New NSP and WEC Sub were created to effect the Transactions and will not have any significant operations, assets or liabilities prior to such mergers. After the Transaction is completed, current common stockholders of NSPM will own shares of Primergy common stock, and current bondholders and preferred stockholders of NSPM will become investors in New NSP. 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 three and nine months ended September 30, 1995. The following Exhibits are incorporated herein by reference: None (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) Date: November 14, 1995 /s/ Kenneth J Zagzebski Controller (Principal Accounting Officer) Date: November 14, 1995 /s/ Neal Siikarla Treasurer (Principal Financial Officer) 2 NORTHERN STATES POWER COMPANY - WISCONSIN INCOME STATEMENTS Three Months Ended Nine Months Ended September 30 September 30 (Thousands of dollars)
1995(*) 1994(*) 1995(*) 1994(*) Operating revenues Electric $97,380 $91,964 $283,744 $281,031 Gas 7,625 9,136 51,420 54,177 ------------ ---------- ----------- ------------ Total 105,005 101,100 335,164 335,208 Operating expenses Fuel for electric generation 1,969 1,473 3,758 4,272 Purchased and interchange power 43,985 43,620 132,788 130,965 Gas purchased for resale 8,585 8,971 35,792 39,051 Administrative and general 5,888 6,569 18,316 20,832 Other operation 14,320 13,969 40,294 39,132 Maintenance 5,140 6,057 14,425 15,827 Depreciation and amortization 8,243 7,729 24,539 22,821 Taxes: Property and general 3,455 3,302 10,455 10,252 Current income tax expense 2,294 (4,171) 14,400 6,973 Net Provision for Deferred 1,353 4,401 2,275 6,833 Net Investment tax credit (234) (236) (702) (707) ------------ ---------- ----------- ------------ Total 94,998 91,684 296,340 296,251 ------------ ---------- ----------- ------------ Operating income 10,007 9,416 38,824 38,957 Other income Other income and deductions net 439 348 850 543 Allowance for funds used during construction - equity 119 158 242 504 ------------ ---------- ----------- ------------ Total Other income 558 506 1,092 1,047 ------------ ---------- ----------- ------------ Income before interest 10,565 9,922 39,916 40,004 Interest charges Interest on long-term debt 4,010 4,023 12,048 11,960 Other interest and amortization 620 1,107 2,696 1,721 Allowance for funds used during construction - debt (112) (102) (296) (319) ------------ ---------- ----------- ------------ Total 4,518 5,028 14,448 13,362 ------------ ---------- ----------- ------------ Net Income $6,047 $4,894 $25,468 $26,642 ============ ========== =========== ============ Statement of Retained Earnings Balance at beginning of period $220,048 $214,449 $218,833 $205,114 Net income for period 6,047 4,894 25,468 26,642 Net Additions 6,047 4,894 25,468 26,642 Dividends paid 6,603 6,206 24,809 18,619 ------------ ---------- ----------- ------------ Balance at end of period $219,492 $213,137 $219,492 $213,137 ============ ========== =========== ============ (*) Unaudited The Notes to Financial Statements are an integral part of the Statements of Income and Retained Earnings 2
3 NORTHERN STATES POWER COMPANY (WISCONSIN) BALANCE SHEETS
September December 31 1995 (*) 1994 (Thousands of dollars) ASSETS UTILITY PLANT Electric $857,841 $836,665 Gas 92,827 88,350 Common 59,702 54,675 --------- ----------- Total 1,010,370 979,690 Accumulated provision for depreciation (364,448) (344,675) --------- ----------- Net utility plant 645,922 635,015 OTHER PROPERTY AND INVESTMENTS 7,962 6,691 CURRENT ASSETS Cash and cash equivalents 141 61 Accounts receivable - net 30,854 36,946 Materials and supplies - at average cost Fuel 1,972 3,413 Other 11,840 12,280 Accrued utility revenues 12,306 16,409 Prepayments and other 8,018 11,030 Deferred tax asset 0 1,415 --------- ----------- Total current assets 65,131 81,554 DEFERRED DEBITS Unamortized debt expense 2,814 2,928 Regulatory assets 33,147 32,783 Federal Income tax receivable 3,307 3,307 Insurance receivable 95 3,091 Other 2,504 2,932 --------- ----------- Total deferred debits 41,867 45,041 --------- ----------- TOTAL ASSETS $760,882 $768,301 ========= =========== LIABILITIES CAPITALIZATION Common Stock - authorized 870,000 shares of $100 par; issued shares: 1995 and 1994 $86,200 $86,200 Premium on common stock 10,461 10,461 Retained Earnings 219,492 218,833 --------- ----------- Total common stock equity 316,153 315,494 LONG-TERM DEBT 213,235 213,700 --------- ----------- Total capitalization 529,388 529,194 CURRENT LIABILITIES Notes payable - parent company 31,600 41,300 Long-term debt due within one year 0 2,910 Accounts payable 12,283 14,415 Salaries, wages, and vacation pay accrued 5,184 6,028 Payable to affiliate companies (principally 17,640 8,982 Federal taxes accrued (1,969) 0 Other taxes accrued 637 936 Interest accrued 5,117 5,485 Deferred tax liability 1,359 0 Other 3,156 1,463 --------- ----------- Total current liabilities 75,007 81,519 DEFERRED CREDITS Accumulated deferred income taxes 100,593 99,748 Accumulated deferred investment tax credits 21,510 22,332 Regulatory liability 17,327 17,961 Customer advances 6,308 5,543 Other 10,749 12,004 --------- ----------- Total deferred credits 156,487 157,588 --------- ----------- TOTAL LIABILITIES $760,882 $768,301 ========= =========== (*) Unaudited The Notes to Financial Statements are an integral part of the Balance Sheet. 3
4 Northern States Power Company (Wisconsin) Statements of Cash Flows
Nine Months Ended September 30 (Thousands of dollars) 1995(*) 1994(*) Cash Flows from Operating Activities: Net Income $25,468 $26,642 Adjustments to reconcile net income to cash from o Depreciation and amortization 25,435 24,049 Deferred income taxes 3,619 12,093 Investment tax credit adjustments (702) (1,030) Allowance for funds used during construction-eq (242) (504) Insurance receivable 2,996 Cash provided from (used by) changes in working ca 19,551 3,732 Cash provided from (used by) changes in other asset (1,389) (5,064) ---------- ---------- Net cash provided from operating activities 74,736 59,918 Cash Flows from Financing Activities: Issuance of long-term debt 0 0 Issuance (repayment) of short-term debt (12,610) (1,700) Redemption of long-term debt(Including Reacquisiti (465) (990) Dividends paid (24,809) (18,619) ---------- ---------- Net cash used for financing activities (37,884) (21,309) Cash Flows from Investing Activities: Capital expenditures (36,293) (35,570) Increase (decrease) in construction related accoun 275 (1,255) Allowance for funds used during construction - equ 242 504 Other (996) (2,358) ---------- ---------- Net cash used for investing activities (36,772) (38,679) Net increase (decrease) in cash and cash equivalents 80 (70) Cash and cash equivalents beginning of period 61 449 ---------- ---------- Cash and cash equivalents end of period $141 $379 ========== ========== (*) Unaudited The Notes to Financial Statements are an integral part of the Statements of Cash Flows. 4
EX-27 2
UT 1,000 3-MOS 9-MOS DEC-31-1995 DEC-31-1995 SEP-30-1995 SEP-30-1995 PER-BOOK PER-BOOK 645,922 645,922 7,962 7,962 65,131 65,131 41,867 41,867 0 0 760,882 760,882 86,200 86,200 10,461 10,461 219,492 219,492 316,153 316,153 0 0 0 0 213,235 213,235 0 0 31,600 31,600 0 0 0 0 0 0 0 0 0 0 199,894 199,894 760,882 760,882 105,005 335,164 3,413 15,973 91,585 280,367 94,998 296,340 10,007 38,824 558 1,092 10,565 39,916 4,518 14,448 6,047 25,468 0 0 6,047 25,468 6,603 24,809 4,010 12,048 18,341 74,736 7.02 29.54 7.02 29.54
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