Xcel Energy 2000 Earnings On Target.Business Editors MINNEAPOLIS--(BUSINESS WIRE)--Jan. 31, 2001 Xcel Energy's operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before for 2000 were $2.12 per share, excluding special charges and extraordinary items, compared with $1.77 per share in 1999. Xcel Energy was formed in August by the merger of Minneapolis-based Northern States Power Co. and Denver-based New Century Energies. "Last year was a watershed watershed, elevation or divide separating the catchment area, or drainage basin, of one river system or group of river systems from another system or group of systems. The term is also often used synonymously with drainage basin. year for Xcel Energy," said Wayne Wayne, city (1990 pop. 19,899), Wayne co., SE Mich., a suburb of Detroit, on the Lower Rouge River; inc. as a village 1869, and with surrounding areas as a city 1960. It has automobile and aircraft industries and other varied manufactures. Brunetti Brunetti may refer to:
"The merger also has enhanced our ability to continue providing reliable energy and top-notch service to our electricity and natural gas customers. In the wake of the power crisis in California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). and spiraling natural gas prices at the wholesale level, we know our customers are relying on us even more than in the past for our energy expertise, both to help find solutions to the energy problems facing our nation and the states we serve and to help them find ways to cope with high energy bills this winter. While we at Xcel Energy do not control or profit from the high price of natural gas, we are doing all we can to ensure our customers know how to reduce their heating costs through conservation," added Brunetti. Regulated operating earnings for 2000 were $1.70 per share, excluding special charges and extraordinary items, compared with $1.51 per share for 1999. The earnings increase was attributable to higher revenues from sales growth, weather conditions and trading operations. In addition, earnings for 1999 were reduced by 7 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. for the disallowance dis·al·low tr.v. dis·al·lowed, dis·al·low·ing, dis·al·lows 1. To refuse to allow: "[The government] of conservation incentives. Nonregulated earnings, excluding special charges, for 2000 were $0.42 per share, compared with $0.26 per share for 1999. Special charges and extraordinary items, primarily related to the merger, reduced 2000 earnings by 58 cents per share. During 1999, Xcel Energy recorded special charges that reduced earnings by 7 cents per share. For more information, see Note 2. Xcel Energy's earnings for 2000, including the impact of special charges and extraordinary items, were $1.54 per share, compared with $1.70 per share in 1999. This release includes forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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," "projected," "objective," "outlook," "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; regulation; risks associated with the California power market; currency translation and transaction adjustments; the higher degree of risk associated with Xcel Energy's nonregulated businesses compared with Xcel Energy's regulated business; and the other risk factors listed from time to time by Xcel Energy in reports filed with the Securities and Exchange Commission (SEC), including Exhibit 99.04 to Xcel Energy's report on Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. filed Aug. 21, 2000. Xcel Energy will host an earnings conference call beginning at noon Central time on Jan. 31. The conference call will be broadcast on our Web site at the following location: http://www.xcelenergy.com, then click on: Investor Information. In addition, the call can be accessed live at 1-877-381-6546. The call will be available in a replay mode from 5:00 p.m. on Jan. 31 through 11:59 p.m. on Feb.2, Central Time. Replay numbers: U.S. Dial-In: 800-642-1686 International Dial-In: 706-645-9291 Access Code: 10280 For more information, contact: E J McIntyre McIntyre, or MacIntyre, is a Scottish surname derived from the Gaelic Mac an t-Saoir literally meaning "Son of the Carpenter". McIntyre is the name of several places:
The process by which the corporation communicates with its investors. 612/215-4559 M D Pritchard Pritchard can refer to:
For news media inquiries only, please call Xcel Energy media relations 612/215-5300 Xcel Energy Internet Address There are two kinds of addresses that are widely used on the Internet. One is a person's e-mail address, and the other is the address of a Web site, which is known as a URL. Following is an explanation of Internet e-mail addresses only. For more on URLs, see URL and Internet domain name. : http://www.xcelenergy.com This information is not given in connection with any sale or offer for sale or offer to buy any security.
XCEL ENERGY INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Thousands of Dollars, Except per Share Data)
Three months ended
Dec. 31
2000 1999
---------- ----------
Operating revenues:
Electric utility...............................$1,506,879 $1,149,820
Gas utility.................................... 572,924 260,741
Electric and gas trading....................... 903,156 408,823
Nonregulated and other......................... 1,981,697 336,109
Equity earnings from investments in affiliates. 15,599 51,769
---------- ----------
Total revenue................................. 4,980,255 2,207,262
Operating expenses:
Electric fuel and purchased power - utility.... 756,103 531,168
Cost of gas sold and transported - utility... 405,225 140,415
Electric and gas trading costs................. 891,836 407,128
Cost of sales - nonregulated and other......... 1,643,828 84,827
Other operating and maintenance expenses -
utility....................................... 367,520 318,233
Other operating and maintenance expenses -
nonregulated.................................. 210,575 104,787
Depreciation and amortization.................. 208,825 210,768
Taxes (other than income taxes ) .......... 79,421 80,500
Special charges ............................... 39,560 31,114
---------- ----------
Total operating expenses...................... 4,602,893 1,908,940
---------- ----------
Operating income................................ 377,362 298,322
Other income (expense):
Minority interest.............................. (11,137) (1,057)
Interest income and other - net................ 13,617 7,408
---------- ----------
Total other income (deductions)............... 2,480 6,351
Interest charges and financing costs:
Interest charges - net of amounts capitalized.. 170,190 121,279
Distributions on redeemable preferred
securities of subsidiary trusts ............. 9,700 9,700
---------- ----------
Total interest and financing costs............ 179,890 130,979
---------- ----------
Income before income taxes and extraordinary
item........................................... 199,952 173,694
Income taxes.................................... 62,151 26,371
---------- ----------
Income before extraordinary item................ 137,801 147,323
Extraordinary item, net of tax.................. - -
---------- ----------
Net income...................................... 137,801 147,323
Dividend requirements and redemption premiums
on preferred stock............................. 1,060 1,062
-------- -------
Earnings available for common shareholders......$ 136,741 $ 146,261
========== ==========
Weighted average common shares outstanding:
Basic.......................................... 339,454 333,680
Diluted........................................ 340,172 333,718
Earnings per share - basic and diluted before
extraordinary item and special charges:
Income before extraordinary item and special
charges.......................................$ 0.49 $ 0.50
Extraordinary item............................. - -
Special charges................................ (0.09) (0.07)
---------------------
Net income.....................................$ 0.40 $ 0.43
========== ==========
Year ended
Dec. 31
2000 1999
---------- ----------
Operating revenues:
Electric utility...............................$5,679,935 $4,921,612
Gas utility.................................... 1,468,880 1,141,429
Electric and gas trading....................... 2,056,399 951,490
Nonregulated and other......................... 3,490,787 688,888
Equity earnings from investments in affiliates. 182,114 112,124
---------- ----------
Total revenue.................................12,878,115 7,815,543
Operating expenses:
Electric fuel and purchased power - utility.... 2,568,160 1,958,912
Cost of gas sold and transported - utility... 948,145 683,455
Electric and gas trading costs................. 2,016,927 946,139
Cost of sales - nonregulated and other......... 2,334,526 323,262
Other operating and maintenance expenses -
utility....................................... 1,398,708 1,327,797
Other operating and maintenance expenses -
nonregulated.................................. 656,260 302,201
Depreciation and amortization.................. 792,395 679,851
Taxes (other than income taxes ) .......... 351,412 360,916
Special charges ............................... 241,042 31,114
---------- ----------
Total operating expenses......................11,307,575 6,613,647
---------- ----------
Operating income................................ 1,570,540 1,201,896
Other income (expense):
Minority interest.............................. (39,889) (2,773)
Interest income and other - net................ 16,107 4,560
---------- ----------
Total other income (deductions)............... (23,782) 1,787
Interest charges and financing costs:
Interest charges - net of amounts capitalized.. 657,305 414,277
Distributions on redeemable preferred
securities of subsidiary trusts ............. 38,800 38,800
---------- ----------
Total interest and financing costs............ 696,105 453,077
---------- ----------
Income before income taxes and extraordinary
item........................................... 850,653 750,606
Income taxes.................................... 304,865 179,673
---------- ----------
Income before extraordinary item................ 545,788 570,933
Extraordinary item, net of tax.................. (18,960) -
---------------------
Net income...................................... 526,828 570,933
Dividend requirements and redemption premiums
on preferred stock............................. 4,241 5,292
------- -------
Earnings available for common shareholders......$ 522,587 $ 565,641
========== ==========
Weighted average common shares outstanding:
Basic.......................................... 337,832 331,943
Diluted........................................ 338,111 332,054
Earnings per share - basic and diluted before
extraordinary item and special charges:
Income before extraordinary item and special
charges.......................................$ 2.12 $ 1.77
Extraordinary item............................. (0.06) -
Special charges................................ (0.52) (0.07)
----------------------
Net income.....................................$ 1.54 $ 1.70
========== ==========
See Notes to Consolidated Financial Statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge XCEL ENERGY INC inc - /ink/ increment, i.e. increase by one. Especially used by assembly programmers, as many assembly languages have an "inc" mnemonic. Antonym: dec. . Notes to Financial Statements Due to the seasonality of Xcel Energy's operating results, quarterly financial results are not necessarily an appropriate base from which to project annual results. Except for the historical statements contained in this document, the matters discussed in this investor relations release, including the statements regarding revenue and earnings expectations, 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," "outlook," "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;
-- regulation;
-- the higher risk associated with Xcel Energy's nonregulated
businesses compared with Xcel Energy's regulated business;
-- risks associated with the California power market;
-- currency translation and transaction adjustments; and
-- the other risk factors listed from time to time in Xcel Energy's
Securities and Exchange Commission (SEC) reports, including
Exhibit 99.01 to Xcel Energy's report on Form 10-Q for the quarter
ended Sept. 30, 2000.
Note 1. Merger to Form Xcel Energy On Aug. 18, 2000, New Century Energies (NCE NCE Networks of Centres of Excellence NCE New Chemical Entity (pharmaceutical research) NCE Normal Curve Equivalent NCE New Civil Engineer (UK Journal) NCE Non-Commercial Educational NCE New Century Energies ) and Northern States Power Company Northern States Power Company (formerly NYSE: NSP) was a publicly-traded S&P 500 electric and natural gas utility holding company based in Minneapolis, Minnesota that is now a subsidiary of Xcel Energy (NYSE: XEL). (NSP (1) (Network Service Provider) An organization that provides a high-speed Internet backbone to ISPs and other service providers. Sprint, MCI and UUNET are examples of NSPs. See Internet backbones. ) merged and formed Xcel Energy Inc. Xcel Energy Inc., a Minnesota Minnesota, state, United States Minnesota (mĭn'ĭsō`tə), upper midwestern state of the United States. It is bordered by Lake Superior and Wisconsin (E), Iowa (S), South Dakota and North Dakota (W), and the Canadian provinces corporation, is a registered holding company under the Public Utility Holding Company Act Public Utility Holding Company Act The 1935 act that gives the SEC authority over the security issues, the accounting systems, the corporate structures, and the intercompany transactions of public utilities. of 1935. Each share of NCE common stock was exchanged for 1.55 shares of Xcel Energy common stock. NSP shares became Xcel Energy shares on a one-for-one basis. Also in connection with the merger, all of NSP's pre-merger utility assets and liabilities were transferred to a newly formed utility subsidiary. The merger was structured as a tax-free tax-free adj. Not subject to taxation; tax-exempt. tax-free Adjective not needing to have tax paid on it: a tax-free lump sum Adj. 1. , stock-for-stock exchange for shareholders of both companies (except for fractional shares Fractional share Stocks amounting to less than one full share, usually resulting from splits, acquisitions, exchanges, or dividend reinvestment programs. fractional share Less than one share of stock, that is, one-third or one-half a share. ), and accounted for as a pooling of interests Pooling of Interests An accounting method, used in mergers and acquisitions, where the balance sheet items of the two companies are simply added together. Notes: The opposite of pooling of interests is the purchase acquisition method. . Consistent with pooling accounting requirements, upon consummation CONSUMMATION. The completion of a thing; as the consummation of marriage; (q.v.) the consummation of a contract, and the like. 2. A contract is said to be consummated, when everything to be done in relation to it, has been accomplished. of the merger in the third quarter of 2000, Xcel Energy recognized all merger-related costs. Additional merger costs were expensed during the fourth quarter of 2000. These merger costs are discussed in Note 2. An allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as of merger costs was made to utility operating companies operating company A business that engages in transactions with outsiders. consistent with prior regulatory filings.
Xcel Energy owns the following direct subsidiaries, some of which
are intermediate holding companies with additional subsidiaries:
-- Northern States Power Company Minnesota (NSP-Minnesota)
-- Northern States Power Company Wisconsin (NSP-Wisconsin)
-- Public Service Company of Colorado (PSCo)
-- Southwestern Public Service Company (SPS)
-- Black Mountain Gas
-- Cheyenne Light, Fuel and Power Company
-- Viking Gas Transmission Company
-- WestGas InterState Inc.
-- Xcel Energy Wholesale Energy Group Inc.
-- Xcel Energy Markets Group Inc.
-- Xcel Energy International Group Inc.
-- Xcel Energy Ventures Inc.
-- Xcel Energy Retail Services Group Inc.
-- Xcel Energy Communications Group Inc.
-- Xcel Energy WYCO Inc.
In addition, Xcel Energy, through the Xcel Wholesale Energy Group, owns 82 percent of the common stock of NRG Energy, Inc., a publicly traded independent power producer. Xcel Energy owned 100 percent of NRG NRG Energy NRG NRG Energy, Inc. NRG Natural Resources Group NRG New Radiancy Group NRG Network Referral Group NRG Network Resource Grapher NRG Numerics Rapporteur Group NRG Neuroprosthetics Research Group NRG notional requirements generator until the second quarter 2000, when NRG completed its initial public offering. Xcel Energy and its subsidiaries collectively are referred to as Xcel Energy. Note 2. Special Charges During 2000, Xcel Energy expensed pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern special charges totaling $241 million. In the aggregate these special charges reduced Xcel Energy's 2000 earnings by 52 cents per share. Of these pretax special charges, $201 million, or 43 cents per share, was recorded during the third quarter of 2000 and $40 million, or 9 cents per share, was recorded during the fourth quarter of 2000. The pretax charges included $52 million related to one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. transaction-related costs incurred in connection with the merger of NSP and NCE. These transaction costs Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). include investment banker Investment Banker A person representing a financial institution that is in the business of raising capital for corporations and municipalities. Notes: An investment banker may not accept deposits or make commercial loans. fees, legal and regulatory approval costs, and expenses for support of and assistance with planning and completing the merger transaction. Also included were $147 million of pretax charges pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to incremental costs Costs which are additional costs to the Service appropriations that would not have been incurred absent support of the contingency operation. See also financial management. of transition and integration activities associated with merging NSP and NCE to begin operations as Xcel Energy. These transition costs include approximately $82 million for severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when and related expenses associated with staff reductions of approximately 700 employees, most of whom were released in the last four months of 2000. Other transition and integration costs include amounts incurred for facility consolidation, systems integration, regulatory transition, merger communications and operations integration assistance. In addition, the pretax charges include $42 million of asset impairments and other costs resulting from the post-merger strategic alignment of Xcel Energy's nonregulated businesses. These special charges, which were recorded in the third quarter, include: $22 million of write-offs of goodwill and project development costs for Planergy and Energy Masters International (EMI (ElectroMagnetic Interference) An electrical disturbance in a system due to natural phenomena, low-frequency waves from electromechanical devices or high-frequency waves (RFI) from chips and other electronic devices. Allowable limits are governed by the FCC. ) energy services operations that will change their business focus and direction after the merger; $10 million of contractual obligations and other costs associated with post-merger changes in the strategic operations and related revaluations of e prime's energy marketing business; and $10 million in asset write-downs and losses resulting from various other nonregulated business ventures that will no longer be pursued after the merger. The pretax special charges recognized for merger transaction, transition and integration activities include approximately $66 million in costs incurred prior to third quarter 2000, which had been deferred prior to merger consummation. Consistent with pooling accounting requirements, upon consummation of the merger to form Xcel Energy in the third quarter of 2000, Xcel Energy expensed all merger-related costs. At Dec. 31, 2000, approximately $50 million of special charges were accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. for severance and other employee costs, and various integration obligations, that will be paid out in future periods. These accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. are reported in Xcel Energy's balance sheet in other current liabilities Other Current Liabilities A balance sheet entry used by companies to group together current liabilities that are not assigned to common liabilities such as debt obligations or accounts payable. . Xcel Energy has completed the majority of its merger-related transition and integration activities in 2000 and expects to fully realize in 2001 and future years the operating synergies anticipated from the merger of NSP and NCE. Xcel Energy does not expect to report merger costs after 2000. Note 3. Significant Factors Affecting Operating Results The following table summarizes the earnings per share contributions of Xcel Energy's businesses.
3 Mos. Ended Year Ended
------------------- -------------------
12/31/00 12/31/99 12/31/00 12/31/99
-------- -------- -------- --------
Regulated before special &
extraordinary $0.42 $0.32 $1.70 $1.51
Special charges - merger costs (0.09) 0.00 (0.44) 0.00
Extraordinary item 0.00 0.00 (0.06) 0.00
---- ------ ------ ------
Total Regulated $0.33 $0.32 $1.20 $1.51
Nonregulated before special
charges 0.07 0.18 0.42 0.26
Special charges 0.00 (0.07) (0.08) (0.07)
---- ------ ------ ------
Nonregulated subsidiaries 0.07 0.11 0.34 0.19
---- ------ ------ ------
Total EPS $0.40 $0.43 $1.54 $ 1.70
====== ====== ====== ======
EPS before special &
extraordinary $0.49 $0.50 $2.12 $ 1.77
===== ===== ====== =====
Extraordinary Item - Electric Utility Restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). With the issuance of a final written order by the Public Utilities Commission of Texas (PUCT PUCT Public Utility Commission of Texas ) in May 2000, addressing the implementation of electric utility restructuring, SPS (Standby Power System) A UPS system that switches to battery backup upon detection of power failure. See UPS. SPS - Symbolic Programming System. Assembly language for IBM 1620. discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: regulatory accounting under SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 71 for the generation portion of its business during the second quarter of 2000. Consistent with current accounting rules, this resulted in extraordinary charges in the second and third quarters of 2000. During the second quarter of 2000, SPS wrote off its generation-related regulatory assets and other deferred costs totaling approximately $19 million. This resulted in an after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. extraordinary charge of approximately $13.7 million against the earnings of Xcel Energy and SPS. During the third quarter of 2000, SPS recorded a charge of $8.2 million before tax, or $5.3 million after tax, related to the defeasance defeasance n. an antiquated word for a document which terminates the effect of an existing writing such as a deed, bond, or contract if some event occurs. DEFEASANCE, contracts, conveyancing. of approximately $275 million of First Mortgage bonds. These extraordinary charges reduced Xcel Energy's earnings by 4 cents per share for the second quarter of 2000 and 2 cents per share for the third quarter of 2000. While the PUCT rate order only addresses Texas operations, SPS plans to pursue a similar strategy to implement the restructuring legislation enacted in New Mexico New Mexico, state in the SW United States. At its northwestern corner are the so-called Four Corners, where Colorado, New Mexico, Arizona, and Utah meet at right angles; New Mexico is also bordered by Oklahoma (NE), Texas (E, S), and Mexico (S). and believes that all of its generation will ultimately be deregulated. Accordingly, SPS has discontinued regulatory accounting under SFAS 71 in all jurisdictions of its generation business. SPS' transmission and distribution business continues to meet the requirements of SFAS 71, as that business is expected to remain regulated. The total impacts of deregulation Deregulation The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry. Notes: Traditional areas that have been deregulated are the telephone and airline industries. may be affected by the results of future state and federal regulatory proceedings prior to actual implementation of full competition, currently anticipated to begin in January January: see month. 2002. Special Charges During 2000, Xcel Energy recorded a pretax charge of $241 million, or 52 cents per share, for special charges related to the merger between NSP and NCE. Of these special charges $201 million, or 43 cents per share, were recorded in the third quarter of 2000 and $40 million, or 9 cents per share, were recorded in the fourth quarter of 2000. See Note 2 for more information on these charges. During 1999, Xcel Energy recorded special charges that reduced earnings by 7 cents per share, as discussed under Nonregulated Operations. Regulated Operations Conservation Incentive Recovery Earnings for 1999 were reduced by 7 cents per share due to the disallowance of 1998 conservation incentives. In June June: see month. 1999, the Minnesota Public Utilities Commission The Minnesota Public Utilities Commission (PUC) is the consumer protection agency in the U.S. state of Minnesota charged with the regulation of public utilities such as electric and telephone service. Its commissioners are appointed by the governor. (MPUC MPUC Maine Public Utilities Commission MPUC Minnesota Public Utilities Commission MPUC Mission Planning Users Conference ) denied NSP-Minnesota recovery of 1998 lost margins, load management discounts and incentives associated with state-mandated programs for electric energy conservation. Xcel Energy recorded a $35 million charge based on this action. NSP-Minnesota appealed the MPUC decision and in December 2000, the Minnesota Court of Appeals reversed the MPUC decision to deny NSP-Minnesota recovery of 1998 conservation incentives. In January 2001, the MPUC appealed the lower court decision to the Minnesota Supreme Court The Minnesota Supreme Court is the highest court in the U.S. state of Minnesota and consists of seven members. The court was first assembled as a three-judge panel in 1849 when Minnesota was still a territory. . At this time, the ultimate outcome of this dispute is unknown. NSP-Minnesota has accrued $40 million, including carrying charges Payments made to satisfy expenses incurred as a result of ownership of property, such as land taxes and mortgage payments. Disbursements paid to creditors, in addition to interest, for extending credit. Consumer Protection laws require full disclosure of all carrying charges. , for potential refunds to customers should the final outcome be unfavorable. Regulatory Adjustments Earnings for 2000 were reduced by approximately 4 cents per share due to revenue adjustments recorded for estimated impacts of regulatory mechanisms in place in Colorado and Texas. In Colorado, approximately $11 million of adjustments were recorded for estimated future rate reductions related to system reliability and availability. In Texas, approximately $11 million of adjustments were recorded for allowed return levels. Estimated Impact of Temperature Changes on Regulated Earnings Xcel Energy analyzes the approximate effect of variations from historical average temperatures on actual sales levels. The following summarizes the estimated impact of temperature variations on actual utility operating results (in relation to sales under normal weather conditions).
Increase (Decrease)
-----------------------------------------
2000 1999 2000
Earnings per Share for the vs. vs. vs.
Period ended Dec. 31: Normal Normal 1999
--------------------- ------ ------ ----
Quarter Ended $0.05 ($0.05) $0.10
Year Ended $0.01 ($0.09) $0.10
Sales Growth
The following table summarizes Xcel Energy's regulated growth in
actual electric and gas sales for the three-month and 12-month periods
ended Dec. 31, 2000, compared with the same periods in 1999.
Fourth Quarter Year Ended
------------- ----------
Actual Normal Actual Normal
------ ------ ------ -------
Electric Residential 16.5% 6.8% 6.8% 4.9%
Electric Commercial &
Industrial 8.7% (1.7)% 5.6% 3.3%
Total Retail Electric Sales 10.9% 0.0% 6.0% 3.6%
Electric Sales for Resale(a) (54.9)% (b) (0.9)% (b)
Total Firm Gas Sales (2.5)% (7.0)% 9.1% 0.1%
Total Gas Sales 1.5% (b) 8.1% (b)
(a) Proprietary trading sales are not included.
(b) Not applicable.
Other Operating and Maintenance Expenses - Utility Utility operating and maintenance expense for the fourth quarter of 2000 increased by approximately $49 million, or 15.5 percent, compared with the fourth quarter of 1999. The increase is largely due to start-up Start-up The earliest stage of a new business venture. costs to establish the Nuclear Management Company, outage out·age n. 1. A quantity or portion of something lacking after delivery or storage. 2. A temporary suspension of operation, especially of electric power. timing at the Riverside and Black Dog power plants, increased bad debt reserves related to wholesale and retail customers and increased transmission costs in the Southwest Power Pool The Southwest Power Pool (SPP) is the oldest North American reliability organization still in operation, having originally formed in 1941 when eleven power companies cooperated to ensure that an aluminum factory would receive reliable power as it worked to assist the US war effort . Utility operating and maintenance expense for 2000 increased by approximately $71 million, or 5.3 percent, compared with 1999. The increase is largely due to the timing of outages at the Monticello and Prairie Island Prairie Island has multiple meanings:
Nonregulated Operations The following table summarizes the earnings-per-share contributions of Xcel Energy's nonregulated businesses.
3 Mos. Ended Year Ended
------------------ -------------------
12/31/00 12/31/99 12/31/00 12/31/99
-------- -------- --------- --------
NRG Energy Inc. $ 0.10 $ 0.08 $ 0.46 $ 0.17
Yorkshire Power 0.01 0.08 0.13 0.13
e prime 0.00 (0.01) (0.02) (0.01)
Seren Innovations Inc. (0.01) (0.01) (0.07) (0.03)
Planergy International (0.02) (0.04) (0.08) (0.06)
Financing Costs & Preferred
Dividends (0.02) (0.01) (0.07) (0.03)
Other 0.01 0.02 (0.01) 0.02
----- ------ ------- ------
Total Nonregulated $0.07 $0.11 $0.34 $0.19
===== ===== ===== ======
NRG Initial Public Offering During the second quarter of 2000, NRG completed an initial public offering of 32,395,500 shares priced at $15 per share. Upon completion of the initial public offering, Xcel Energy owns approximately 147.6 million Class A shares of NRG common stock, or 82 percent of NRG's outstanding shares. Management has concluded that this offering of NRG stock will not affect Xcel Energy's ability to use the pooling of interests method of accounting for the merger of NSP and NCE. The offering's net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of approximately $454 million were used exclusively by NRG for general corporate purposes, including funding a portion of NRG Energy's project investments and other capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. for 2000. No proceeds of this offering were received by Xcel Energy. A portion of the proceeds was accounted for as a gain on the sale of 18 percent of Xcel Energy's ownership in NRG. This gain of $216 million was not recorded in earnings, but consistent with Xcel Energy's accounting policy was recorded as an increase in the common stock premium component of stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. . The NRG earnings for the fourth quarter of 2000 in this report exclude earnings of approximately $7.0 million, or 2 cents per share, related to minority shareholder interests. The NRG earnings for 2000 in this report exclude earnings of approximately $28.6 million, or 8 cents per share, related to minority shareholder interests. NRG Results NRG's earnings for the fourth quarter 2000 and the full year of 2000 continue to benefit from increased generation capacity due to a number of recently acquired generation assets. During 2000, NRG has increased its megawatt meg·a·watt n. Abbr. MW One million watts. meg  a·watt ownership interest in generating facilities in
operation by over 4,000 megawatts. NRG's earnings for 2000 were
also influenced by favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. weather conditions that increased demand for electricity in the northeast and western United States Noun 1. western United States - the region of the United States lying to the west of the Mississippi River West Santa Fe Trail - a trail that extends from Missouri to New Mexico; an important route for settlers moving west in the 19th century , market dynamics, strong performance from existing assets and increases in fuel prices, primarily natural gas and oil, which contributed to higher market prices for electricity. As a consequence of the extraordinary dynamics in the electricity markets in which NRG operates in during 2000, NRG's earnings contribution to Xcel Energy is estimated to have been approximately 8 cents per share more for the year than would occur under normal circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or . Yorkshire Power Equity earnings from Yorkshire Power were flat for 2000, compared with 1999. Equity earnings from Yorkshire for the fourth quarter of 1999 reflect a favorable adjustment to tax liabilities related to the disposal of its generation business. e prime e prime results for the third quarter of 2000 were reduced by special charges of 2 cents per share for contractual obligations and other costs associated with post-merger changes in the strategic operations and related revaluations of e prime's energy marketing business. Seren Seren Chlordiazepoxide, see there Results As expected, Seren's expansion of its broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). communications network The transmission channels interconnecting all client and server stations as well as all supporting hardware and software. in St. Cloud, Minn., and construction in California resulted in an increase in losses for the fourth quarter of 2000 and for the full year of 2000. Planergy International Results Planergy's results for 2000 were reduced by special charges of 4 cents per share for the write-offs of goodwill and project development costs at Planergy. During the third quarter of 2000, Planergy and EMI, both wholly owned subsidiaries Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of Xcel Energy, were merged to form Planergy International. As a result of this merger, Planergy International reassessed its business model and made a strategic realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. , which resulted in the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of $22 million (before tax) of goodwill and project development costs. In addition, Planergy's results for 1999 were reduced by a special charge of 4 cents per share to write off goodwill that was recorded for its acquisitions of Energy Masters Corp. in 1995 and Energy Solutions International in 1997. EMI wrote off approximately $17 million of goodwill (before tax) during the fourth quarter of 1999. Financing Costs and Preferred Dividends preferred dividend n. a payment of a corporation's profits to holders of preferred shares of stock. (See: preferred stock) Nonregulated results include interest expense and preferred dividend costs, which are incurred at the Xcel Energy and intermediate holding company levels and are not directly assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. to individual subsidiaries. Other The Other Nonregulated results for the third quarter of 2000 were reduced by special charges of 2 cents per share. These special charges include $10 million in asset write-downs and losses resulting from various other nonregulated business ventures that will no longer be pursued after the merger. In addition, Other Nonregulated results for 1999 were reduced by special charges of 3 cents per share in the fourth quarter for a valuation write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of Xcel Energy's investment in the publicly traded common stock of CellNet Data Systems, Inc. Note 4. NRG Acquisitions In October 2000, NRG agreed to purchase a 50-percent interest in Sierra Pacific Resources' 522-megawatt coal-fired North Valmy Generating Station and a 100-percent interest in 25 megawatts of peaking units near Valmy Station. The Valmy assets are currently owned by Sierra Pacific Resources' subsidiary, Sierra Pacific Power Company. The agreement includes a transitional power purchase agreement (TPPA TPPA Texas Professional Photographers Association TPPA Tennessee Professional Photographers Association TPPA Toledo Police Patrolman's Association (Toledo, OH) TPPA Texas Pork Producer Association, Inc. ) for Sierra Pacific Power to purchase energy and ancillary Subordinate; aiding. A legal proceeding that is not the primary dispute but which aids the judgment rendered in or the outcome of the main action. A descriptive term that denotes a legal claim, the existence of which is dependent upon or reasonably linked to a main claim. services through March 1, 2003, under a contract that will provide price certainty for Sierra's customers. The asset purchase price was approximately $273 million, net of the TPPA, subject to tax and other adjustments. The acquisition is expected to close in the first quarter of 2001. In November 2000, NRG agreed to acquire a 5,691-megawatt portfolio of operating projects and projects in construction and advanced development from LS Power, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control for $658 million, subject to purchase price adjustments. The acquisition is expected to close in the first quarter of 2001. NRG will own 100 percent of this project. In November 2000, NRG and Dynegy Inc. agreed to acquire 1,330 megawatts of power generation facilities from Sierra Pacific Resources Sierra Pacific Resources NYSE: SRP is a utility holding company based in Reno, Nevada. The company's focus is in energy distribution and commercial and retail sales of electricity and natural gas. History The holding company was created in 1984. . The facilities include the 740-megawatt gas-fired Clark Generating Station and 590 megawatts of the 605-megawatts, coal-fired Reid Gardner Generating Station. The facilities serve the rapidly growing Las Vegas Las Vegas (läs vā`gəs), city (1990 pop. 258,295), seat of Clark co., S Nev.; inc. 1911. It is the largest city in Nevada and the center of one of the fastest-growing urban areas in the United States. market. The asset purchase price was $634 million, subject to other adjustments. The agreements include a transitional power purchase agreement for Nevada Power to purchase energy and ancillary services until March 1, 2003 under a contract that will help provide price stability for its customers throughout the transition to an open market in Nevada. The transaction is subject to various regulatory approvals and is expected to close during the second quarter of 2001. NRG will own 50 percent of this project. In November 2000, NRG, through subsidiaries, is joining the SRW SRW Super Robot Wars (video games) SRW Single Rear Wheel (truck) SRW Segmental Retaining Wall SRW Soldier Radio Waveform SRW Strategic Reconnaissance Wing SRW Search and Retrieve via the Web Cogeneration cogeneration In power systems, use of steam for both power generation and heating. High-temperature, high-pressure steam from a boiler and superheater first passes through a turbine to produce power. Limited Partnership. The limited partnership owns and will operate the 420-megawatt, natural gas-fired cogeneration plant now under construction at the DuPont Company's Sabine River Sabine River River, eastern Texas and western Louisiana, U.S. Rising in northeastern Texas, it flows southeast and south, broadens near its mouth to form Sabine Lake, and continues from Port Arthur, Texas, through Sabine Pass to enter the Gulf of Mexico after a course of 578 Works (SRW) petrochemical petrochemical, any one of a large group of chemicals derived from a component of petroleum or natural gas. The cracking processes for manufacturing gasoline produce vast quantities of gaseous hydrocarbons. facility near Orange, Texas. NRG expects the plant to begin commercial operations in the summer of 2001. Bechtel Energy Corporation is the construction contractor. Electricity and all the steam generated by the power plant will be sold to the adjacent DuPont Sabine River Works facility. Additional electricity will be sold on the merchant market. NRG will own 50 percent of the $260 million facility. In December 2000, NRG agreed to acquire the Bridgeport and New Haven Harbor New Haven Harbor is an inlet on the north side of Long Island Sound in the state of Connecticut in the United States. Stations in Connecticut Connecticut, state, United States Connecticut (kənĕt`ĭkət), southernmost of the New England states of the NE United States. It is bordered by Massachusetts (N), Rhode Island (E), Long Island Sound (S), and New York (W). from Wisconsin Wisconsin, state, United States Wisconsin (wĭskŏn`sən, –sĭn), upper midwestern state of the United States. It is bounded by Lake Superior and the Upper Peninsula of Michigan, from which it is divided by the Menominee Energy Corp. for $325 million, subject to normal purchase price adjustments. The purchase will add 1,051 megawatts to NRG's portfolio. NRG plans to seek approval for adding pollution control technology to the Bridgeport Harbor Station. The transaction is subject to regulatory approvals and is expected to close during the first half of 2001. NRG will own 100 percent of this project.
The following table highlights NRG's recent and planned
acquisitions.
NRG Acquisitions Cost in Millions MW Ownership Expected Close
---------------- ---------------- -- --------- --------------
Cajun Fossil Assets
(USA) $1,026 1,708 100% 1st Qtr. 2000
Killingholme (UK) $615 680 100% 1st Qtr. 2000
Flinders Power
(Australia) $170 760 100% 3rd Qtr. 2000
Conectiv (USA) $800 1,875 100% 1st Qtr. 2001
Narva Power (Estonia) $65-70 3,000 49% 1st Half 2001
North Valmy (USA) $273 547 50% 1st Qtr. 2001
LS Power (USA) $658 5,691 100% 1st Qtr. 2001
Clark/Gardner (USA) $634 1,330 50% 2nd Qtr. 2001
SRW Cogeneration (USA) $260 420 50% 2nd Qtr. 2001
Bridgeport/New Haven
(USA) $325 1,051 100% 1st Qtr. 2001
Note 5. Financing Activities During the third quarter of 2000, Xcel Energy filed a $1 billion universal debt shelf registration with the SEC. During the fourth quarter of 2000, Xcel Energy issued $600 million of unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. under this shelf registration. During the fourth quarter of 2000, NRG filed a shelf registration with the SEC. Based on this registration NRG can issue up to $1.65 billion of an indeterminate That which is uncertain or not particularly designated. INDETERMINATE. That which is uncertain or not particularly designated; as, if I sell you one hundred bushels of wheat, without stating what wheat. 1 Bouv. Inst. n. 950. amount of debt securities, preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. , common stock, depository The place where a deposit is placed and kept, e.g., a bank, savings and loan institution, credit union, or trust company. A place where something is deposited or stored as for safekeeping or convenience, e.g., a safety deposit box. share, warrants and convertible securities. This registration includes $150 million of securities that are being carried forward from a previous NRG shelf registration. Note 6. Commitments and Contingencies Contingencies (ISSN 1048-9851) is the bimonthly magazine of the American Academy of Actuaries, providing a large and diverse readership with general interest and technical articles on a wide range of issues related to the actuarial profession. California Power Market Xcel Energy's subsidiary NRG operates in and sells to the wholesale power market in California. During the fourth quarter of 2000, the inability of certain California utilities to recover rising energy costs through regulated prices charged to retail customers has created financial difficulties. The California utilities have appealed to state agencies and regulators for the opportunity to be reimbursed for costs incurred that are not currently recoverable through the existing rate structure. Absent such relief, some of the utilities have indicated they may be unable to continue to service their debt and/or otherwise pay obligations, or would consider discontinuing energy service to customers in order to avoid incurring in·cur tr.v. in·curred, in·cur·ring, in·curs 1. To acquire or come into (something usually undesirable); sustain: incurred substantial losses during the stock market crash. 2. costs that are not recoverable. Due to these circumstances, various bond rating agencies have lowered the credit rating of the California utilities to below investment grade. California state agencies and regulators, along with Federal agencies such as the FERC FERC Federal Energy Regulatory Commission FERC FEMA Emergency Response Capability , have characterized char·ac·ter·ize tr.v. character·ized, character·iz·ing, character·iz·es 1. To describe the qualities or peculiarities of: characterized the warden as ruthless. 2. the situation as a national emergency and have expressed interest in discussing ways to resolve the issue. Although changes may be necessary for the California utility regulatory model to address the problem in the long run, in the short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. the alternatives being discussed include financial support for distressed utilities in order to ensure continued energy service to California customers. However, at this time it is unknown whether or when such financial support will be made available to California utilities. At Dec. 31, 2000, NRG had not yet collected approximately $105 million in revenues from distressed utilities and the independent system operator in California, which are potentially at risk if financial relief or support is not provided. In addition, Xcel Energy's wholesale trading operation has a receivable from the California Independent System Operator for approximately $3 million. Although there is uncertainty as to the final resolution of this matter, management believes that its revenue from California utilities and the independent system operator will ultimately be collected. Note 7. Trading Operations Effective with year-end 2000 reporting, Xcel Energy has changed it policy for the presentation of energy trading operating results. Previously, trading margins were recorded net of costs in electric and gas revenues. After the merger, Xcel Energy has elected to report trading revenues separately from trading costs Trading costs Costs of buying and selling marketable securities and borrowing. Trading costs include commissions, slippage, and the bid/ask spread. See: Transactions costs. . Prior years' results have been restated for consistency with 2000 reporting. Xcel Energy's trading operations are conducted mainly by PSCo and e prime, a nonregulated subsidiary. Trading revenues and costs of goods sold do not include the revenue and production costs associated with energy produced from generation assets or resold long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. contracts of Xcel Energy's utility operating companies and NRG. Quarterly trading revenues and costs of goods sold for 2000 and 1999 are listed below.
(in thousands)
2000 1999
--------------- ----------------
Electric and Gas Trading Revenue:
Quarter 1........................$ 226,167 $ 77,678
Quarter 2........................ 363,449 133,125
Quarter 3........................ 563,627 331,864
Quarter 4........................ 903,156 408,823
--------------- ----------------
Year ended Dec. 31...............$ 2,056,399 $ 951,490
=============== ================
Electric and Gas Trading Costs:
Quarter 1........................$ 224,356 $ 76,659
Quarter 2........................ 348,445 131,996
Quarter 3........................ 552,290 330,356
Quarter 4........................ 891,836 407,128
--------------- ----------------
Year ended Dec. 31...............$ 2,016,927 $ 946,139
=============== ================
XCEL ENERGY INC.
Unaudited Earnings Release Summary
All dollars in thousands, except earnings per share
3 months ended Dec. 31 2000 1999
----------------------------------------------------------------------
Operating revenue $ 4,980,255 $ 2,207,262
Net income $ 137,801 $ 147,323
Earnings available for common $ 136,741 $ 146,261
Average shares - common and
potentially dilutive 340,172 333,718
Earnings per share - diluted
Earnings before special charges
& extraordinary item $0.49 $0.50
Special charges ($0.09) ($0.07)
Extraordinary item $0.00 $0.00
----- -----
Total earnings per share $0.40 $0.43
===== =====
Year ended Dec. 31 2000 1999
----------------------------------------------------------------------
Operating revenue $ 12,878,115 $ 7,815,543
Net income $ 526,828 $ 570,933
Earnings available for common $ 522,587 $ 565,641
Average shares - common and
potentially dilutive 338,111 332,054
Earnings per share - diluted:
Earnings before special charges
& extraordinary item $2.12 $1.77
Special charges ($0.52) ($0.07)
Extraordinary item ($0.06) $0.00
------ -----
Total earnings per share $1.54 $1.70
===== =====
Return on Equity, before special
charges & extraordinary item 13.2% 11.4%
Return on Equity, after special
charges & extraordinary item 9.6% 10.9%
Book value $16.46 $15.94
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