-----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, G+TFhR5eWUg0MI3eTq0QIFBRJUYcXUsc/4jn/d79d0muILAhmfWboiypV1B/kZGs KsJhChRtVCzKPGjfbUZ7Sg== 0000072909-97-000002.txt : 19970520 0000072909-97-000002.hdr.sgml : 19970520 ACCESSION NUMBER: 0000072909-97-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 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: 97608907 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 MARCH 31, 1997 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 incorporation or organization) Identification No.) 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 May 15, 1997 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 March 31 1997 1996 (Thousands of dollars) Operating revenues Electric.......................................... $98,872 $100,360 Gas............................................... 39,376 38,370 Total........................................... 138,248 138,730 Operating expenses Purchased and interchange power................... 46,713 48,080 Fuel for electric generation...................... 2,250 1,781 Gas purchased for resale.......................... 27,792 26,261 Other operation................................... 12,446 11,956 Maintenance....................................... 3,669 4,614 Administrative and general........................ 4,670 6,187 Conservation and demand side management........... 2,234 2,279 Depreciation and amortization..................... 9,349 8,529 Taxes: Property and general....................... 3,638 3,648 Current income tax......................... 7,499 7,901 Deferred income tax........................ 949 380 Investment tax credits recognized.......... (220) (227) Total........................................... 120,989 121,389 Operating income................................... 17,259 17,341 Other income Other income and deductions - net................. 12 126 Allowance for funds used during construction - equity........................................ 50 136 Total other income .............................. 62 262 Income before interest charges..................... 17,321 17,603 Interest charges Interest on long-term debt........................ 4,080 3,980 Other interest and amortization................... 705 799 Allowance for funds used during construction - debt.......................................... (72) (95) Total........................................... 4,713 4,684 Net Income ........................................ $12,608 $12,919 Statements of Retained Earnings (Unaudited) Balance at beginning of period..................... $234,751 $221,638 Net income for period.............................. 12,608 12,919 Dividends paid to parent........................... (6,999) (6,396) Balance at end of period........................... $240,360 $228,161 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) March 31, December 31, 1997 1996 (Thousands of dollars) ASSETS Utility Plant Electric................................. $900,747 $894,143 Gas...................................... 100,149 99,817 Other.................................... 68,214 67,262 Total................................ 1,069,110 1,061,222 Accumulated provision for depreciation......................... (403,746) (395,619) Net utility plant.................... 665,364 665,603 Other Property and Investments............. 10,377 10,232 Current Assets Cash..................................... 1,835 208 Accounts receivable - net................ 42,819 40,250 Fuel inventories - at average cost....... 2,896 7,780 Other materials and supplies inventories - at average cost...................... 5,640 5,918 Unbilled utility revenues................ 15,303 21,074 Prepayments and other.................... 8,752 11,703 Total current assets................... 77,245 86,933 Other Assets Regulatory assets........................ 36,030 37,102 Federal income tax receivable............ 3,307 3,307 Unamortized debt expense................. 1,816 1,855 Other.................................... 4,589 4,099 Total other assets.................... 45,742 46,363 TOTAL ASSETS......................... $798,728 $809,131 LIABILITIES AND EQUITY Capitalization Common stock - authorized 870,000 shares of $100 par value, issued shares: 1997 and 1996, 862,000................. $86,200 $86,200 Premium on common stock................ 10,461 10,461 Retained earnings...................... 240,360 234,751 Total common stock equity............ 337,021 331,412 Long-term debt........................... 231,710 231,688 Total capitalization................. 568,731 563,100 Current Liabilities Notes payable - parent company........... 23,400 39,300 Accounts payable......................... 9,776 16,493 Payable to affiliate companies (principally parent)................... 13,792 15,544 Salaries, wages, and vacation pay accrued................................ 4,711 6,417 Taxes accrued............................ 7,060 1,641 Interest accrued......................... 4,398 4,459 Current regulatory liability - purchased gas costs.................... 6,086 381 Current deferred income taxes............ 1,573 1,670 Other.................................... 3,835 3,507 Total current liabilities............ 74,631 89,412 Other Liabilities Accumulated deferred income taxes........ 101,592 100,898 Accumulated deferred investment tax credits................................ 19,748 20,024 Regulatory liabilities................... 19,634 19,409 Customer advances........................ 7,579 7,334 Benefit obligations and other............ 6,813 8,954 Total other liabilities.............. 155,366 156,619 TOTAL LIABILITIES AND EQUITY....... $798,728 $809,131 The Notes to Financial Statements are an integral part of the Balance Sheets. Northern States Power Company (Wisconsin) Statements of Cash Flows (Unaudited) Three Months Ended March 31 1997 1996 (Thousands of dollars) Cash Flows from Operating Activities: Net Income...................................... $12,608 $12,919 Adjustments to reconcile net income to cash from operating activities: Depreciation and amortization................. 9,648 8,744 Deferred income taxes......................... 492 (112) Deferred investment tax credits recognized.... (220) (227) Allowance for funds used during construction - equity....................... (50) (136) Cash provided by changes in working capital..... 12,596 20,146 Cash used for changes in other assets and liabilities............................... (1,051) (8,221) Net cash provided by operating activities 34,023 33,113 Cash Flows from Investing Activities: Capital expenditures............................ (9,145) (11,742) Decrease in construction payables............... (63) (615) Allowance for funds used during construction - equity......................... 50 136 Other........................................... (339) (3) Net cash used for investing activities (9,497) (12,224) Cash Flows from Financing Activities: Repayment of notes payable to parent - net...... (15,900) (13,900) Dividends paid to parent........................ (6,999) (6,396) Net cash used for financing activities (22,899) (20,296) Net increase in cash and cash equivalents.......... 1,627 593 Cash and cash equivalents at beginning of period... 208 247 Cash and cash equivalents at end of period......... $1,835 $840 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 March 31, 1997 and Dec. 31, 1996, the results of its operations for the three months ended March 31, 1997 and 1996 and its cash flows for the three months ended March 31, 1997 and 1996. 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, 1996 (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 1996 financial information to conform with the 1997 presentation. These reclassifications had no effect on net income as previously reported. 1. 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 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 1996 Form 10-K and Part II, Item 5-Other Information of this report. During 1995, the Company, NSPM and WEC submitted filings to the Federal Energy Regulatory Commission (FERC), applicable state regulatory commissions and other governmental authorities seeking approval of the proposed merger to form Primergy. The goal of NSPM, WEC and the Company was to complete the merger by year-end 1996. Approvals were obtained from regulators in Michigan and North Dakota during 1996. However, all necessary regulatory approvals have not yet been obtained and, as a result, the merger has not yet been completed. NSPM, WEC and the Company continue to pursue regulatory approvals, without unacceptable conditions. The 1997 developments related to the merger are discussed below. In January 1997, a Dane County Circuit Court judge ordered the PSCW to delay its decision on the merger, pending the results of an investigation regarding alleged prohibited conversations between one of the commissioners and WEC officials. The judge further ordered the PSCW to investigate the allegations. The Company cannot predict when the PSCW will resolve the allegations and proceed with deliberations concerning the proposed merger. On March 5, 1997, the Minnesota Office of the Attorney General - Residential Utilities Division, an intervenor in the Minnesota merger case, filed a brief which expressed for the first time opposition to the merger. On March 20, 1997, the Minnesota Public Utilities Commission (MPUC) heard comments from the parties on the need for additional hearings or other procedures prior to making a decision on the merger. On April 4, 1997, the MPUC decided to hold additional public hearings before it issues a decision on the proposed merger. The MPUC also requested comments on the impact of the merger on the state's ability to restructure the electric utility industry in accordance with 16 restructuring principles adopted by the MPUC. The public hearings and comment period will be completed by June 20, 1997, with a MPUC decision on the merger case expected by late summer 1997. On Jan. 15, 1997, the United States Department of Justice served its second request for information and documents regarding merger notification under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. NSPM and WEC anticipate completing responses to the second request in May 1997. On April 28, 1997, Madison Gas & Electric Company, the Citizens Utility Board of Wisconsin and the Wisconsin Federation of Cooperatives sought to intervene in the proceedings regarding the Primergy transaction before the Securities and Exchange Commission (SEC) under the Public Utility Holding Company Act of 1935, as amended (PUHCA). The intervention, which was filed approximately 11 months after the expiration of the time for such filings, requests, among other things, the SEC: (i) reject the proposed transaction on the grounds that it is contrary to PUHCA, (ii) order NSP and WEC to divest their gas utility properties, or (iii) order a hearing on the efficiency and competitive implications of the proposed transaction. NSP and WEC will oppose the intervention and requests of the intervenors. On May 14, 1997, the FERC issued a lengthy Opinion and Order (the Opinion) in connection with the proposed business combination. In the Opinion, the FERC concludes that it cannot approve the proposed merger at this time and that the administrative law judge was incorrect to find that the proposed merger, as conditioned, was consistent with the public interest, the applicable standard under Section 203 of the Federal Power Act. The Opinion states, however, that the participants should be given another opportunity to attempt to reach consensus on the means by which Primergy's post-merger market power may be adequately mitigated and the FERC remands the case to a settlement judge and directs the participants to attempt to reach a resolution of the market power issues. The mechanisms suggested by the FERC for mitigating market power includes possible divestiture of some generation assets. Any such proposed resolution must be submitted to the FERC for its review and approval. The Opinion also approves several contested settlements, provides guidance as to the formation of the independent system operator which the applicants volunteered to form and rules on certain other matters in connection with the proposed merger. NSP and WEC are considering the effects of the FERC ruling. The merger filings with each state included a request for deferred accounting treatment and rate recovery of costs incurred in conjunction with the proposed merger. At March 31, 1997, the Company had incurred $0.9 million of costs associated with the proposed merger which have been deferred as a component of Other Assets. If the merger is not completed, these costs would be charged to expense. Under the Merger Agreement, completion of the merger is subject to numerous conditions, that, unless waived by the affected party, must be met, including but not limited to: the prior receipt of all necessary regulatory approvals without the imposition of materially adverse terms; the accuracy of each party's representations and warranties in the Merger Agreement, other than representations and warranties whose inaccuracy does not result in a material adverse effect on the business, assets, financial condition, results of operations or prospects of such party and its subsidiaries taken as a whole; and no such material adverse effect having occurred, or being reasonably likely to occur, with respect to either party. In addition, the Merger Agreement provides that both WEC and NSPM have the right to terminate the Merger Agreement under certain circumstances, including without limiting the foregoing, the inability to fulfill all conditions to the closing of the merger at April 30, 1997 (other than receipt of all regulatory approvals without any materially adverse terms), or the failure to receive all regulatory approvals without any materially adverse terms by Oct. 31, 1997. Prior to April 30, 1997, NSP and WEC entered into an agreement reserving the right for each party to assert, at any time after April 30, 1997, that all conditions to closing (other than receipt of all regulatory approvals without any materially adverse terms) were met or were not met at April 30, 1997. NSPM and the Company continue to work with WEC to complete the merger. However, since numerous conditions are beyond its control, the Company cannot state whether all necessary conditions for completion of the merger will occur. 2. Regulation and Rate Matters 1997 Rate Cases - There have been no changes in customer rates for any of the jurisdictions in which the Company operates since the 1996 Form 10-K was filed. In 1996 the PSCW approved the Company's application for no change in rates for 1997. However, certain classes of customers will experience small changes in rates, as a result of rate design revisions requested by the Company, which are expected to have an offsetting effect on overall revenues. In the Company's 1997 rate order, the PSCW denied current rate recovery of the federal government's assessment for the decommissioning and decontamination of federal uranium enrichment facilities. The cost of the Company's share of NSPM's assessment is billed through the Interchange Agreement. The Company's annual expense for this item is approximately $600,000. This cost disallowance was considered in the overall cost of service which, as noted previously, supported no change to overall electric and gas rates. NSPM plans to continue paying the assessments to the federal government, and based on the PSCW's decision to allow future rate recovery with interest if the courts ultimately decide the assessments must be paid, the Company is recording the assessments as a regulatory asset beginning in 1997. Fuel Cost Recovery - The Company is reviewing its fuel costs incurred to date and expected for the remainder of the year and may consider a fuel cost recovery filing for 1997, as allowed by the PSCW. If made and approved by the PSCW, the filing would provide recovery of costs charged from NSPM, through the Interchange Agreement, which include higher than expected fuel and purchased power costs, including the impact of an unscheduled outage at NSPM's Monticello nuclear plant. 3. Commitments and Contingent Liabilities As discussed in Note 8 to the Financial Statements in the 1996 Form 10-K, the Company has been named as a potentially responsible party in connection with environmental contamination at a site in Ashland, Wisconsin. With respect to developments since the 1996 Form 10-K was filed, the Company is about to begin discussions with the Wisconsin Department of Natural Resources concerning other responsible parties and remediation options for the Ashland site. 4. Business Developments Union Agreements - A new three-year collective-bargaining agreement was ratified by the Company's union membership on April 10, 1997. All provisions of this new agreement are effective retroactively to Jan. 1, 1997. The prior agreement had expired Dec. 31, 1996, but was extended to April 30, 1997. New Natural Gas System - Through a competitive bidding process, the Company has been selected to own and operate a natural gas system at Fort McCoy, a regional U.S. Army training center near Sparta, Wisconsin. The total project cost is more than $2 million and estimated annual revenue is $1.7 million. The 10-year contract includes renewal provisions. Construction is expected to be completed in time for the 1997-1998 heating season. 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 business combination involving the two companies in a "merger-of-equals" transaction. See Note 1 to the Financial Statements and Part II of this report for more information. The Company's net income for the quarter ended March 31, 1997 was $12.6 million, a decrease of $0.3 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", "possible", "potential" 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; changes in federal or state legislation; regulatory decisions regarding the proposed combination of NSPM and WEC; and the other risk factors listed from time to time by the Company in reports filed with the SEC, including Exhibit 99.01 to this report on Form 10-Q for the quarter ended March 31, 1997. First Quarter 1997 Compared with First Quarter 1996 Electric revenues in total decreased $1.5 million or 1.5 percent for the first quarter of 1997 compared to the first quarter of 1996. Sales to customers other than NSPM decreased $1.1 million due to less favorable weather in 1997, partially offset by customer and sales growth. On a weather- normalized basis, sales are estimated to have increased 2.0 percent in the first quarter of 1997 compared to the first quarter of 1996. The remaining $0.4 million reduction in electric revenues relates to lower Interchange Agreement billings to NSPM in 1997. Gas revenues increased $1.0 million or 2.6 percent in the first quarter of 1997 compared to the first quarter of 1996. Gas sales for the first quarter of 1997 decreased 3.6 percent compared to the same period in 1996 due to less favorable weather in 1997. Offsetting the sales decline were higher costs per unit of purchased gas, as discussed below, which are reflected in customer rates through the purchased gas adjustment clause mechanism. Fuel for electric generation and Purchased and interchange power together decreased $0.9 million or 1.8 percent for the first quarter of 1997 compared to the first quarter of 1996 mainly due to lower average production costs per unit charged to the Company by NSPM. Gas purchased for resale increased $1.5 million or 5.8 percent in the first quarter of 1997 compared to the first quarter of 1996 primarily due to higher costs per unit of purchased gas. Offsetting the increase in unit costs were reduced purchases in 1997 due to lower gas sales. Other operation, Maintenance, and Administrative and general expenses together decreased $2.0 million or 8.7 percent in the first quarter of 1997 compared to the same period in 1996. Contributing to the cost reductions were lower employee benefit expenses and lower maintenance expenses in the transmission and distribution areas. Partially offsetting these decreases were approximately $0.9 million in network transmission service costs incurred as a result of FERC Order No. 888. Depreciation and amortization increased $0.8 million or 9.6 percent in the first quarter of 1997 compared with the same period in 1996 due to increases in the Company's plant in service. Property and general taxes were approximately the same for both periods. Income tax expense was nearly the same in the first quarter of 1997 as compared to the first quarter of 1996, reflecting comparable pretax income for both periods. Other income and deductions decreased $0.2 million, primarily due to gains recorded in 1996 on nontraditional gas sales which did not recur in 1997 and reduced AFC related to lower levels of qualifying construction work in progress in the first quarter of 1997. Interest expense was approximately the same for both periods. Part II. OTHER INFORMATION 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 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." At the time of 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 LaCrosse and Hudson, Wisconsin with a net historical cost at March 31, 1997 of approximately $18.0 million. This transfer is for purposes of complying with the Wisconsin Public Utility Holding Company Act. Detailed information with respect to the Merger Agreement and the proposed Transaction is contained in the 1996 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 March 31, 1997. The unaudited pro forma income statement information gives effect to the Transaction as if it had occurred at Jan. 1, 1997. 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 noncurrent 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 noncurrent 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 NSPM WEC Pro Forma PRIMERGY CORP: (as reported)(as reported) Combined (in millions, except per share amounts) As of March 31, 1997: Utility Plant-Net $4,319 $3,063 $7,382 Current Assets 724 557 1,281 Other Assets * 1,556 1,204 2,604 Total Assets $6,599 $4,824 $11,267 Common Stockholders' Equity $2,148 $1,965 $4,113 Preferred Securities 400 30 430 Long-Term Debt 1,589 1,409 2,998 Total Capitalization 4,137 3,404 7,541 Current Liabilities 1,028 517 1,545 Other Liabilities * 1,434 903 2,181 Total Equity & Liabilities $6,599 $4,824 $11,267 For the Three Months Ended March 31, 1997: Utility Operating Revenues $742 $511 $1,253 Utility Operating Income $88 $66 $154 Net Income, after Preferred Dividend Requirements $62 $45 $107 Earnings per Common Share: As reported $.90 $.40 -- NSPM Equivalent Shares -- -- $.78 Primergy Shares -- -- $.48 * Combined amount includes a $156 million pro forma adjustment to conform the presentation of noncurrent 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 1997 year-to-date revenues of $17.0 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 noncurrent deferred income taxes in the summarized unaudited pro forma combined balance sheet information as a net liability. The Unaudited WE Company Pro Forma WISCONSIN ENERGY COMPANY (as Reported) (as Reported) Combined* (Millions of Dollars) As of March 31, 1997: Utility Plant-Net $3,063 $666 $3,709 Current Assets 496 77 588 Other Assets ** 930 56 833 Total Assets $4,489 $799 $5,130 Common Stockholder's Equity $1,702 $337 $2,039 Preferred Stockholder's Equity 30 -- 30 Long-Term Debt 1,372 232 1,604 Total Capitalization $3,104 $569 $3,673 Current Liabilities 496 75 571 Other Liabilities ** 889 155 886 Total Equity & Liabilities $4,489 $799 $5,130 For the Three Months Ended March 31, 1997: Utility Operating Revenues $511 $138 $649 Utility Operating Income $66 $17 $83 Net Income, after Preferred Dividend Requirements $43 $13 $56 * Combined Balance Sheet data includes pro forma adjustments for the transfer of certain gas properties from the Company to New NSP. ** Combined amount includes a $152 million pro forma adjustment to conform the presentation of noncurrent deferred taxes as a net liability. 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 months ended March 31, 1997. 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/ Roger D. Sandeen Controller (Principal Accounting Officer) /s/ Neal A. Siikarla Treasurer (Principal Financial Officer) Date: May 15, 1997 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 3-MOS DEC-31-1996 MAR-31-1997 PER-BOOK 665,364 10,377 77,245 45,742 0 798,728 86,200 10,461 240,360 337,021 0 0 231,710 23,400 0 0 0 0 0 0 206,597 798,728 138,248 8,228 112,761 120,989 17,259 62 17,321 4,713 12,608 0 12,608 6,999 4,080 34,023 $14.63 $14.63
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", "possible", "potential" 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 nonregulated 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 nonregulated 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-----