-----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, RC7cua9zATdeeTo/n39IlWmzl+V+RKo8fW2ucVlQ5izou8cho1aEATIvygHQzLG2 L8TiZIXe75PVlsfwGjjxlg== 0000092521-96-000002.txt : 19960117 0000092521-96-000002.hdr.sgml : 19960117 ACCESSION NUMBER: 0000092521-96-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19951130 FILED AS OF DATE: 19960116 SROS: CSX SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHWESTERN PUBLIC SERVICE CO CENTRAL INDEX KEY: 0000092521 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 750575400 STATE OF INCORPORATION: NM FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03789 FILM NUMBER: 96504010 BUSINESS ADDRESS: STREET 1: SPS TOWER STREET 2: TYLER AT SIXTH ST CITY: AMARILLO STATE: TX ZIP: 79170 BUSINESS PHONE: 8063782121 MAIL ADDRESS: STREET 1: PO BOX 1261 CITY: AMARILLO STATE: TX ZIP: 79170 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 For the period ended November 30, 1995 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________________________ to __________________________ Commission file number 1-3789 SOUTHWESTERN PUBLIC SERVICE COMPANY (Exact name of registrant as specified in its charter) New Mexico 75-0575400 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Tyler at Sixth, Amarillo, Texas 79101 (Address of principal executive offices) (Zip Code) Registrant's Telephone Number, including area code (806) 378-2121 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 shorter 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 __ As of January 10, 1996, 40,917,908 shares of the Company's common stock were outstanding. SOUTHWESTERN PUBLIC SERVICE COMPANY FORM 10-Q For the Quarter Ended November 30, 1995 TABLE OF CONTENTS PART I. Financial Information Condensed Consolidated Balance Sheets at November 30, 1995 and August 31, 1995 Condensed Consolidated Statements of Earnings for the three and twelve months ended November 30, 1995 and November 30, 1994 Condensed Consolidated Statements of Cash Flows for the three and twelve months ended November 30, 1995 and November 30, 1994 Notes to Condensed Consolidated Financial Statements Independent Accountants' Report Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. Other Information Signatures Exhibit 12. Statement of Computation of Ratio of Earnings PART I. FINANCIAL INFORMATION
SOUTHWESTERN PUBLIC SERVICE COMPANY Condensed Consolidated Balance Sheets Assets November 30, August 31, 1995 1995 (Unaudited) (In Thousands) Utility plant: Utility plant in service $2,352,188 $2,366,435 Accumulated depreciation (810,657) (854,015) Net plant in service 1,541,531 1,512,420 Construction work in progress 47,738 31,026 Net utility plant 1,589,269 1,543,446 Nonutility property and investments 71,221 70,087 Current assets: Cash and temporary investments 12,581 36,860 Accounts receivable, net 54,868 73,262 Accrual for unbilled revenues 21,287 28,626 Materials and supplies, at average cost 20,535 21,647 Prepayments and other current assets 10,741 10,734 Total current assets 120,012 171,129 Deferred debits 124,312 124,343 Total assets $1,904,814 $1,909,005 Continued . . . See accompanying notes to condensed consolidated financial statements.
SOUTHWESTERN PUBLIC SERVICE COMPANY Condensed Consolidated Balance Sheets Capitalization and Liabilities November 30, August 31, 1995 1995 (Unaudited) (In Thousands) Capitalization: Common stock, $1 par value, authorized - 100,000,000 shares; issued and outstanding - 40,917,908 shares $ 40,918 $ 40,918 Premium on capital stock 306,376 306,376 Retained earnings 372,903 373,458 Total common shareholders' equity 720,197 720,752 Preferred stock - redemption not required 72,680 72,680 Long-term debt 580,653 582,276 Total capitalization 1,373,530 1,375,708 Current liabilities: Current maturities of long-term debt 254 276 Accounts payable 16,910 12,187 Liability for refunds to customers 4,804 5,969 Interest accrued 15,973 9,067 Fuel and purchased power expense accrued 29,577 40,164 Taxes accrued 33,468 39,757 Dividends payable on common stock 22,505 22,505 Other current liabilities 42,430 39,843 Total current liabilities 165,921 169,768 Deferred credits: Deferred income taxes 347,171 344,794 Unamortized investment tax credits 5,990 6,053 Other 12,202 12,682 Total deferred credits 365,363 363,529 Total capitalization and liabilities $1,904,814 $1,909,005 See accompanying notes to condensed consolidated financial statements.
SOUTHWESTERN PUBLIC SERVICE COMPANY Condensed Consolidated Statements of Earnings (Unaudited) Three Months Ended Twelve Months Ended 11-30-95 11-30-94 11-30-95 11-30-94 (In Thousands, Except Per Share Amounts) Operating revenues $200,957 $187,216 $847,823 $827,594 Operating expenses: Operation: Fuel 89,450 84,026 375,476 391,618 Purchased power 1,438 1,098 5,579 4,406 Other 28,557 25,733 110,291 107,440 Maintenance 7,234 7,890 28,382 29,494 Depreciation and amortization 16,388 15,292 62,166 59,957 Taxes other than property and income taxes 5,277 4,810 19,590 19,376 Property taxes 5,678 5,844 23,843 22,862 Income taxes 13,697 12,435 65,135 56,490 Total operating expenses 167,719 157,128 690,462 691,643 Operating income 33,238 30,088 157,361 135,951 Other income, net: Income taxes (585) (486) (3,873) (171) Other, net 1,503 1,535 10,942 1,921 Total other income, net 918 1,049 7,069 1,750 Interest charges 10,988 9,968 42,953 40,410 Net earnings 23,168 21,169 121,477 97,291 Dividends on cumulative preferred stock 1,219 1,219 4,878 4,878 Earnings applicable to common stock $ 21,949 $ 19,950 $116,599 $ 92,413 Earnings per common share* $ .54 $ .49 $ 2.85 $ 2.26 Weighted average shares outstanding 40,918 40,918 40,918 40,918 Dividends declared per common share $ .55 $ .55 $ 2.20 $ 2.20 ( ) Denotes deduction. *Based on weighted average shares outstanding. See accompanying notes to condensed consolidated financial statements.
SOUTHWESTERN PUBLIC SERVICE COMPANY Condensed Consolidated Statements of Cash Flows (Unaudited) Three Months Ended Twelve Months Ended 11-30-95 11-30-94 11-30-95 11-30-94 (In Thousands) Operating Activities: Cash received from customers $ 225,264 $ 213,958 $ 835,409 $ 839,328 Cash paid to suppliers and employees (128,683) (135,212) (503,790) (537,112) Interest paid (4,154) (4,258) (41,986) (39,964) Income taxes paid (19,205) (11,010) (58,283) (47,813) Taxes other than income taxes paid (9,248) (9,059) (42,087) (41,531) Other operating cash receipts and payments, net 441 (747) 11,007 13,841 Net cash provided by operating activities 64,415 53,672 200,270 186,749 Investing Activities: Construction expenditures (32,991) (22,146) (105,507) (90,195) Nonutility property and investments (1,134) (1,360) (27,993) (7,348) Acquisitions (29,200) - (29,200) - Net cash used in investing activities (63,325) (23,506) (162,700) (97,543) Financing Activities: Issuance of long-term debt - - 76,204 - Retirement of long-term debt (1,645) (150) (18,375) (26,170) Change in short-term debt - (14,994) - (4,500) Dividends paid (common and preferred) (23,724) (23,724) (94,898) (94,898) Net cash used in financing activities (25,369) (38,868) (37,069) (125,568) Net Increase (Decrease) in Cash and Temporary Investments (24,279) (8,702) 501 (36,362) Cash and Temporary Investments at Beginning of Period 36,860 20,782 12,080 48,442 Cash and Temporary Investments at End of Period $ 12,581 $ 12,080 $ 12,581 $ 12,080 Reconciliation of Net Earnings to Net Cash Provided by Operating Activities: Net earnings $ 23,168 $ 21,169 $ 121,477 $ 97,291 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 16,388 15,292 62,166 59,957 Deferred income taxes and investment tax credits 3,074 2,420 10,122 13,484 Allowance for equity funds used during construction (60) (43) (245) (243) Cash flows impacted by changes in: Accounts receivable 18,394 15,610 (1,121) 2,063 Accrual for unbilled revenues 7,339 9,852 (9,821) 7,663 Materials and supplies 1,112 (1,373) (924) (2,534) Accounts payable 4,723 (1,420) 6,029 1,665 Fuel and purchased power expense accrued (10,587) (12,228) 921 (4,188) Taxes accrued (6,289) 1,087 2,022 99 Liability for refunds to customers (1,165) 1,536 (536) 3,016 Other, net 8,318 1,770 10,180 8,476 Net cash provided by operating activities $ 64,415 $ 53,672 $ 200,270 $ 186,749 See accompanying notes to condensed consolidated financial statements.
SOUTHWESTERN PUBLIC SERVICE COMPANY Notes to Condensed Consolidated Financial Statements (Unaudited) (1) Interim periods. The results of operations for the interim periods are not necessarily an indication of the expected results for the fiscal year due to the seasonal nature of Southwestern Public Service Company's (the Company) business. The unaudited condensed consolidated financial statements included herein were prepared from the books of the Company in accordance with generally accepted accounting principles and reflect all adjustments (none of which are other than normal recurring adjustments) which are, in the opinion of management, necessary to provide a fair statement of the results of operations and financial position for the interim periods. Such financial statements generally conform to the presentation reflected in the Company's Annual Report to Stockholders. The current interim period reported herein is included in the fiscal year subject to independent audit at the end of the year. (2) Income taxes. The components of income tax expense (benefit) are as follows:
Three Months Ended Twelve Months Ended 11-30-95 11-30-94 11-30-95 11-30-94 (In Thousands) Taxes on operating income: Federal-current $10,050 $ 9,658 $51,985 $41,151 Federal-deferred 3,287 2,490 11,468 13,876 Investment tax credits (62) (62) (250) (250) State-current 422 349 1,932 1,713 13,697 12,435 65,135 56,490 Taxes on other income: Federal-current 730 495 4,938 313 Federal-deferred (151) (9) (1,096) (142) State-current 6 - 31 - 585 486 3,873 171 Total income taxes $14,282 $12,921 $69,008 $56,661
(3) Merger with Public Service Company of Colorado (PSCo). The Company and Denver-based PSCo entered into a definitive merger agreement (the Merger) on August 22, 1995, to form a registered public utility holding company named New Century Energies, Inc., which will be the parent company for the Company and PSCo. The transaction is subject to various conditions, including receipt of the approval of the shareholders of the Company and PSCo, as well as the approval of or the taking of other action by the Securities and Exchange Commission, the Federal Trade Commission, the Department of Justice, the Nuclear Regulatory Commission, the Federal Energy Regulatory Commission, and the state public utility commissions in Texas, Colorado, New Mexico, Wyoming, and Kansas. The Merger, with a targeted completion date in the fall of 1996, is conditioned on qualifying as a tax-free reorganization and being accounted for as a pooling of interests. (4) Rate and Regulatory Matters. A Public Utility Commission of Texas (PUCT) substantive rule requires periodic examination of the Company's fuel and purchased power costs, the efficiency of the use of such fuel and purchased power, fuel acquisition and management policies and purchase power commitments. On May 1, 1995, the Company filed with the PUCT a petition for a fuel reconciliation for the months of January 1992 through December 1994. A hearing was held in September 1995, and in January 1996 an order was issued which will require the Company to make a $3.9 million fuel refund consisting of $2.1 million of overrecovered fuel costs (which has previously been accrued) and $1.8 million of disallowed fuel costs for the period. The Company is filing for a motion for rehearing on the disallowed fuel costs. Additionally, the order will require the Company to flow through to customers 100% of margins from non-firm off-system opportunity sales as of January 1995. Prior Commission rulings had allowed the Company to retain 25% of these margins. The retained portion of these margins for calendar year 1995 was $2.3 million. The $1.8 million and $2.3 million would be charged to earnings if the Company is unsuccessful in this matter; however, the Company believes the final determination of this matter will not significantly affect consolidated financial results. On December 19, 1989, the FERC issued its order regarding the 1985 rate case. The Company appealed certain portions of the order that related to recognition in rates of the reduction of the federal income tax rate from 46% to 34%. The United States Court of Appeals for the District of Columbia Circuit remanded the case, directing the FERC to reconsider the Company's claim of an offsetting cost and limiting the FERC's actions. The FERC issued its Order on Remand in July 1992, required filings were made and a hearing was completed in February 1994. In October 1994, the administrative law judge issued a favorable initial decision that, if approved by the FERC, would result in a substantial recovery by the Company. Negotiated settlements with the Company's partial requirements customers and Texas-New Mexico Power Company were approved by the FERC in July 1993 and September 1993, respectively, and the Company received approximately $2.8 million. In a settlement with the Company's New Mexico cooperative customers, which the FERC approved in July 1995, the Company received approximately $7.0 million, including interest. Resolutions with the remaining wholesale customers, Golden Spread member cooperatives and Lyntegar Electric Cooperative have not been reached. The Company cannot reasonably estimate the ultimate amount recoverable from these proceedings; however, a favorable resolution could materially improve 1996 consolidated earnings. (5) General. See note (1) of Notes to Consolidated Financial Statements in the Company's 1995 Annual Report on Form 10-K for a summary of the Company's significant accounting policies. Independent Accountant's Report Southwestern Public Service Company: We have reviewed the accompanying condensed consolidated balance sheet of Southwestern Public Service Company and subsidiaries as of November 30, 1995, and the related condensed consolidated statements of earnings and cash flows for the three-month and twelve-month periods ended November 30, 1995 and 1994. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to such condensed consolidated financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet and statement of capitalization of Southwestern Public Service Company and subsidiaries as of August 31, 1995, and the related consolidated statements of earnings, shareholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated October 10, 1995, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of August 31, 1995, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. DELOITTE & TOUCHE LLP January 12, 1996 Dallas, Texas MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Operating Revenues and Kilowatt-Hour Sales Substantially all of the Company's operating revenues result from the sale of electric energy. The principal factors determining revenues are the amount and price per unit of energy sold. The following table describes the principal components of changes in revenues.
Increase (Decrease) From Corresponding Prior Period Three Months Twelve Months Ended Ended 11-30-95 11-30-95 (Dollars In Thousands) Estimated effect on revenues of variations in: Kilowatt-hour (kwh) sales* $ 7,101 $ 28,138 Rates 1,987 13,177 Fuel and purchased power cost recovery 6,176 (8,646) Subtotal 15,264 32,669 Non-firm kwh sales (1,523) (12,440) Total revenue increase ) $ 13,741 $ 20,229 Increase in kwh sales* (in millions) 182 714 Decrease in non-firm kwh sales (in millions) (205) (681) *Comprised of retail and wholesale sales excluding economy and interruptible (non-firm) wholesale kwh sales.
Variations in Kwh Sales. The revenue increases for the three- and twelve-month periods resulted primarily from increased sales to rural electric cooperatives (RECs), primarily Cap Rock Electric Cooperative (Cap Rock). Sales began in February 1994 and increased to 100% of Cap Rock's West Texas requirements in February 1995. Increased irrigation sales, reflecting below normal precipitation, also contributed to the rise in REC sales for both periods. Accounting adjustments to the estimate of delivered not billed kwh sales also increased revenues for the twelve-month period by approximately $8.3 million. These estimated kwh sales relate to energy used by customers but not billed until the subsequent month. Variations in Rates. Increased revenues for the twelve-month period are primarily the result of greater demand charge revenues paid by certain wholesale customers. Additionally, a settlement of the 1985 Federal Energy Regulatory Commission (FERC) rate case with the Company's New Mexico wholesale REC customers contributed increased revenues of approximately $4.0 million (and interest of $3.0 million which is included in other income). Variations in Fuel and Purchased Power Cost Recovery. Revenue increases for the three-month period are due to increased coal and gas costs. Decreases for the twelve-month period are due to substantially lower natural gas prices. Variations in Non-Firm Kwh Sales. The amount of revenues arising from non-firm sales is dependent, in large part, upon the amount and cost of power available to the Company for sale, the demand for power, the availability of competing hydroelectric power from the Northwest and generation from major plants in the West. The decline in non-firm sales for both periods was primarily due to available power from major western plants and excess hydroelectric power in the Northwest. Mild weather throughout the region, particularly in the winter, also contributed to the decline for the year. In January 1996 the Public Utility Commission of Texas ordered the company to flow through 100% of the margins related to these sales as of January 1995 (compared to 75% which has previously been flowed through). The amount of these margins for calendar year 1995 was $2.3 million. The company is requesting rehearing of this order. See Note (4). Operating Expenses and Non-Operating Items Operating Expenses. Fuel and purchased power expense comprised 54.2% and 55.2% of total operating expenses for the three and twelve months ended November 30, 1995, respectively. When compared to the corresponding periods last year, these expenses increased $5.8 million, or 6.8%, for the three-month period and decreased $15.0 million, or 3.8%, for the twelve-month period. Increased fuel costs caused the three-month rise. Substantially lower gas prices and decreased generation of electricity, primarily due to lower non-firm sales, contributed to the decline in the twelve-month period. Fuel expense (excluding purchased power expense), per net kwh generated, increased from 1.68 to 1.83 cents and decreased from 1.82 to 1.78 cents for the respective three- and twelve-month periods. The increase in the three-month period is due to higher coal and natural gas costs while the decline in the twelve-month period is due to lower natural gas prices. Total operating expenses, excluding fuel and purchased power, increased $4.8 million, or 6.7%, for the three-month period, and increased $13.8 million, or 4.7%, for the twelve-month period. The increase in the three-month period is due primarily to merger-related costs. (See Other Matters). The increase in the twelve-month period was due primarily to increased federal income taxes as a result of larger taxable income. Other Income. Other income increased in the twelve-month period due primarily to approximately $3.0 million of interest from the rate case settlement with New Mexico wholesale customers. The write-off of nonrecurring expenses of $3.4 million (related to engineering and design costs of a previously planned generating facility and business development costs related to a generation project in Missouri) reduced other income for last year. Earnings Current operating income and earnings applicable to common stock improved for both periods primarily because of increased kwh sales to RECs (primarily Cap Rock), residential and commercial customers. The increase for the twelve-month period also resulted from the change in estimate of delivered not billed kwh sales ($5.4 million or 13 cents per share) and the New Mexico rate settlement ($4.5 million or 11 cents per share). Assuming normal weather conditions, earnings for the 1996 fiscal year are expected to remain relatively level. A favorable resolution of the 1985 FERC rate case with Texas wholesale REC customers could materially improve 1996 earnings. Additionally, Quixx has entered into an agreement to sell certain water rights to the Canadian River Municipal Water Authority (CRMWA) for $14.5 million that would result in an after-tax gain of approximately $7.6 million. The sale is conditioned on CRMWA receiving assurances from certain member cities that the cost of the water rights will be repaid. The contract is scheduled to close in fiscal 1996; however, the Company expects, but can give no assurance, that this sale will be closed. LIQUIDITY AND CAPITAL RESOURCES The Company's demand for capital is normally related to the construction of utility plant and equipment. Cash construction expenditures excluding AFUDC for the three and twelve months ended November 30, 1995, were $33.0 million and $105.5 million, respectively. Such expenditures are expected to approximate $112.9 million for 1996. The anticipated purchase of TUCO Inc. (TUCO) from Cabot Corporation for $77 million and the purchase of certain Texas properties from Texas-New Mexico Power Company (TNP) for $29.2 million will result in additional cash requirements in 1996. The Company cannot accurately forecast the portion of internally generated funds to be used for capital expenditures, but expects that it will be approximately 40% in fiscal 1996 (including TNP and TUCO). The Company redeemed on December 27, 1995, all of its outstanding Preferred Stock that was redeemable by its terms and in January 1996 purchased and cancelled all of the outstanding 2,600 shares of its 14.50% Cumulative Preferred Stock that was not redeemable by its terms. The aggregate redemption and purchase price of the shares of stock was approximately $76 million, including accrued dividends. The Company plans to finance the redemption and purchase of the Preferred Stock with the use of short-term borrowings, which would be repaid, subject to market conditions, with the issuance of new Preferred Stock or Bonds during 1996. The information set forth in the preceding paragraph does not include the expenditures or refinancing in connection with the redemption and purchase of the Preferred Stock. The Company currently contemplates the sale of other Preferred Stock, Common Stock and Bonds during the five-year period 1996-2000 in connection with the financing of its construction program and retirement of Bonds. The Company has effective a shelf registration under which a remaining aggregate of $130 million of First Mortgage Bonds and Cumulative Preferred Stock may be issued (a maximum of $40 million Preferred Stock is issuable thereunder). At November 30, 1995, the Company maintained committed bank lines of credit aggregating $128 million, of which the Company had no borrowings outstanding at November 30, 1995. The Company will seek approval of the holders of its Common Stock at the Annual Meeting to be held on January 31, 1996, (the Annual Meeting) to amend its Articles relating to the Preferred Stock in order to provide for updated provisions and eliminate certain restrictive covenants imposed by the current provisions. OTHER MATTERS Electric utilities have historically operated in a highly regulated environment in which they have an obligation to provide electric service to their customers in return for an exclusive franchise within their service territory with an opportunity to earn a regulated rate of return. This regulatory environment is changing. The generation sector has experienced competition from nonutility power producers and the FERC is requiring utilities, including the Company, to provide wholesale transmission service to others and may order electric utilities to enlarge their transmission systems to facilitate transmission services without impairing reliability. State regulatory authorities are in the process of changing utility regulations in response to federal and state statutory changes and evolving markets. In part in response to these changing conditions the Company has entered into a definitive merger agreement with Public Service Company of Colorado (PSCo) (the Merger) to form a registered public utility holding company named New Century Energies, Inc.(NCE). Consummation of the Merger is subject to customary conditions including receiving shareholder and regulatory authority approvals. The Company's shareholders will be asked to approve the Merger at the Annual Meeting. The two utilities are working toward a completion date in the fall of 1996. The foregoing discussions of the Company's "Results of Operations" and "Liquidity and Capital Resources" do not take into account any changes that could arise as a result of the Merger. For further information concerning the Merger and the impact on the Company, reference is made to the joint proxy of the Company and PSCo and the prospectus for NCE (including the merger agreement and exhibits thereto) dated December 13, 1995, filed with the Securities and Exchange Commission. PART II. OTHER INFORMATION Item 5. Other Information. On August 22, 1995, the Company and Denver-based Public Service Company of Colorado (PSCo) entered into a definitive agreement providing for a "merger of equals" of the two companies, as previously reported in the Company's Current Report on Form 8-K dated August 22, 1995, and in it Annual Report on Form 10-K for the fiscal year ended August 31, 1995. Detailed information with respect to the business combination is contained in the Joint Proxy Statement/Prospectus dated December 13, 1995, (contained in the Registration No. 33-64951). The Company's Joint Proxy Statement/Prospectus, which includes unaudited pro forma combined financial data for the Company and PSCo giving effect to the business combination, to the extent information has been provided by the Company, is incorporated herein by reference. The Company has filed applications with the applicable state jurisdictions and FERC and numerous intervenors have filed in the proceedings. Hearings in some of the state jurisdictions have been scheduled to commence in the summer of 1996. The Company's ratio of earnings to fixed charges for the twelve months ended November 30, 1995, was 5.06. The ratio of earnings to fixed charges and preferred dividend requirements combined was 4.35 for such period. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: 12 Statement showing computations of ratio of earnings for the twelve months ended November 30, 1995 15 Letter of Deloitte & Touche LLP regarding unaudited condensed consolidated interim financial information (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. SOUTHWESTERN PUBLIC SERVICE COMPANY Doyle R. Bunch II Executive Vice-President Accounting and Corporate Development DATE: January 12, 1996 EX-12 2 RATIO OF EARNINGS
SOUTHWESTERN PUBLIC SERVICE COMPANY EXHIBIT 12. Statement of Computation of Ratio of Earnings Twelve Months Ended November 30, 1995 (Dollars In Thousands) Computation of Ratio of Earnings to Fixed Charges: Fixed charges, as defined: Interest on long-term debt $ 41,992 Amortization of debt premium, discount and expense 541 Other interest 3,125 Estimated interest factor of rental charges 1,292 Total fixed charges $ 46,950 Earnings as defined: Net earnings per statement of earnings $121,477 Fixed charges as shown 46,950 Income taxes: Federal-current 56,923 Federal-deferred 10,372 State 1,963 Investment tax credits (250) Earnings available for fixed charges $237,435 Ratio of earnings to fixed charges 5.06 Computation of Ratio of Earnings to Fixed Charges and Preferred Dividend Requirements Combined: Total fixed charges, as shown above $ 46,950 Preferred dividend requirements* 7,602 Total fixed charges and preferred dividend requirements combined $ 54,552 Earnings available for fixed charges and preferred dividend requirements combined $237,435 Ratio of earnings to fixed charges and preferred dividend requirements combined 4.35 *Preferred dividend requirements: Annual preferred dividend requirement $ 4,878 Less amount deductible for income tax purposes 82 Net requirement [A] $ 4,796 1 / (100% - effective rate) [B] 1.568 Effective tax rate 36.2% [A] x [B] $ 7,520 Add amount deductible for income tax purposes 82 Preferred dividend requirements $ 7,602
EX-15 3 LETTER OF DELOITTE & TOUCHE LLP EXHIBIT 15 Southwestern Public Service Company: We have made a review, in accordance with standards established by the American Institute of Certified Public Accountants, of the unaudited condensed interim financial information of Southwestern Public Service Company and subsidiaries for the periods ended November 30, 1995 and 1994, as indicated in our report dated January 12, 1996; because we did not perform an audit, we expressed no opinion on that information. We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended November 30, 1995, is incorporated by reference in Amendment No. 1 to Registration Statement No. 33-53171 on Form S-3, Registration Statement No. 33-27452 on Form S-8, and Registration Statement No. 33-64951 on Form S-4. We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act. Deloitte & Touche LLP January 12, 1996 Dallas, Texas EX-27 4 FDS
UT 1,000 3-mos AUG-31-1995 NOV-30-1995 PER-BOOK 1,589,269 71,221 120,012 124,312 0 1,904,814 40,918 306,376 372,903 720,197 0 72,680 580,653 0 0 0 254 0 0 0 531,030 1,904,814 200,957 13,697 154,022 167,719 33,238 918 34,156 10,988 23,168 1,219 21,949 22,505 10,787 64,415 0.54 0
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