Xcel Energy Hits 2001 Earnings Target.Business Editors MINNEAPOLIS--(BUSINESS WIRE)--Jan. 30, 2002 Xcel Energy's earnings for 2001 were $2.30 per share, compared with $1.54 per share in 2000. Excluding unusual items, ongoing earnings were $2.31 per share in 2001, compared with $2.12 per share in 2000. In 2001, several unusual items had a combined effect of a 1-cent reduction in earnings per share. Earnings in 2000 were reduced by merger-related special charges of 52 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. and by an extraordinary item related to industry 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). of 6 cents per share. "Xcel Energy had a solid year financially and operationally in our first full year as a merged company. The knowledge and commitment of our management team have enabled our company to meet our 2001 earnings target, despite a slowing economy and changes in the energy industry," 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 regional economy in which we operate continues to outperform Outperform An analyst recommendation meaning a stock is expected to do slightly better than the market return. Notes: Exact definitions vary by brokerage, but in general this rating is better than neutral and worse than buy or strong buy. the national economy. Our operations continue to deliver excellent results, based on sustainable growth strategies. Our earnings guidance for 2002 remains $2.40 - $2.50 per share," Brunetti said. Excluding unusual items, utility earnings for 2001 were $1.91 per share, compared with $1.70 per share for 2000. The earnings increase was attributable to higher energy marketing and trading margins and lower financing costs, partially offset by higher operating costs operating costs npl → gastos mpl operacionales . Xcel Energy's 74-percent stake in NRG Energy NRG Energy, Inc. (NRG) is a wholesale power generation company founded in 1989, which has an ownership interest in 47 power generating facilities around the world. The diverse portfolio of facilities, are primarily in the Northeast, South Central and Western regions of the United , a leading global energy company, contributed 58 cents per share in 2001, compared with 46 cents per share on an 82-percent ownership basis in 2000. Xcel Energy will host an earnings conference call beginning at 1:30 p.m. Central Standard Time on Jan. 30. The conference call will be broadcast on Xcel Energy's Web site at the following location: http://www.xcelenergy.com, then click on: Investor Information. In addition, the call can be accessed live at:
U.S. Dial-In: 1-888-273-9891
International Dial-In: (612) 332-0418
The call will be available in a replay mode from 5 p.m. on Jan. 30
through 11:59 p.m. Feb. 6, Central Standard Time. Replay numbers:
U.S. Dial-In: 1-800-475-6701
International Dial-In: (320) 365-3844
Access Code: 624468
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 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). 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, including Exhibit 99.01 to Xcel Energy's report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended Sept. 30, 2001. Xcel Energy (NYSE NYSE See: New York Stock Exchange :XEL XEL New Carlisle, Quebec, Canada - New Carlisle / via Rail Service (Airport Code) ) is a major U.S. electricity and natural gas company with operations in 12 Western and Midwestern Mid·west or Middle West A region of the north-central United States around the Great Lakes and the upper Mississippi Valley. It is generally considered to include Ohio, Indiana, Illinois, Michigan, Wisconsin, Minnesota, Iowa, Missouri, Kansas, and states. Formed by the merger of Denver-based 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 Minneapolis-based Northern States Power Co. (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. ), Xcel Energy provides a comprehensive portfolio of energy-related products and services to 3.2 million electricity customers and 1.7 million natural gas customers through its regulated operating companies operating company A business that engages in transactions with outsiders. . In terms of customers, it is the fourth-largest combination electricity and natural gas company in the nation. Company headquarters are located in Minneapolis Minneapolis (mĭn'ēăp`əlĭs), city (1990 pop. 368,383), seat of Hennepin co., E Minn., at the head of navigation on the Mississippi River, at St. Anthony Falls; inc. 1856. . More information is available at 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 (Unaudited)
(Thousands of Dollars, Except per Share Data)
Three months ended Year ended
Dec. 31 Dec. 31
---------------------- ------------------------
2001 2000 2001 2000
---------- ---------- ----------- -----------
Operating revenues:
Electric utility... $1,384,536 $1,511,555 $ 6,394,737 $ 5,674,485
Gas utility........ 475,492 572,924 2,052,651 1,468,880
Electric and gas
trading........... 662,458 898,471 3,186,850 2,061,839
Nonregulated and
other............. 792,334 694,788 3,176,896 2,203,878
Equity earnings
from investments
in affiliates..... 20,785 16,199 217,070 182,714
---------- ---------- ----------- -----------
Total operating
revenues........ 3,335,605 3,693,937 15,028,204 11,591,796
Operating expenses:
Electric fuel and
purchased power -
utility........... 599,204 766,196 3,171,660 2,580,723
Cost of gas sold
and transported -
utility........... 306,806 405,225 1,506,694 948,145
Electric and gas
trading costs..... 664,543 887,713 3,097,601 2,020,482
Cost of sales -
nonregulated and
other............. 411,948 326,884 1,667,385 1,006,587
Other operating and
maintenance
expenses -
utility........... 379,631 392,192 1,506,039 1,446,122
Other operating and
maintenance
expenses -
nonregulated...... 231,429 213,385 807,955 636,280
Depreciation and
amortization...... 264,237 208,825 949,200 792,395
Taxes (other than
income taxes)..... 80,097 79,421 316,492 351,412
Special charges.... 39,212 39,560 62,230 241,042
---------- ---------- ----------- -----------
Total operating
expenses........ 2,977,107 3,319,401 13,085,256 10,023,188
---------- ---------- ----------- -----------
Operating income.... 358,498 374,536 1,942,948 1,568,608
Other income
(expense):
Minority interest.. (14,248) (11,737) (72,508) (40,489)
Interest income and
other - net....... 18,449 17,043 72,161 18,639
---------- ---------- ----------- -----------
Total other
income
(expense)....... 4,201 5,306 (347) (21,850)
Interest charges and
financing costs:
Interest charges -
net of amounts
capitalized....... 208,046 170,190 782,399 657,305
Distributions on
redeemable
preferred
securities of
subsidiary trusts. 9,700 9,700 38,800 38,800
---------- ---------- ----------- -----------
Total interest
charges and
financing costs. 217,746 179,890 821,199 696,105
---------- ---------- ----------- -----------
Income before income
taxes and
extraordinary
items.............. 144,953 199,952 1,121,402 850,653
Income taxes........ 10,345 62,151 336,723 304,865
---------- ---------- ----------- -----------
Income before
extraordinary
items.............. 134,608 137,801 784,679 545,788
Extraordinary items,
net of tax......... 10,287 -- 10,287 (18,960)
---------- ---------- ----------- -----------
Net income.......... 144,895 137,801 794,966 526,828
Dividend
requirements
on preferred stock. 1,061 1,060 4,241 4,241
---------- ---------- ----------- -----------
Earnings available
for common
shareholders....... $ 143,834 $ 136,741 $ 790,725 $ 522,587
========== ========== =========== ===========
Weighted average
common shares
outstanding -
diluted (1000's)... 345,384 340,172 343,742 338,111
Earnings per share -
diluted:
Earnings before
unusual items...... $ 0.46 $ 0.49 $ 2.31 $ 2.12
Conservation
incentive
adjustment......... -- -- 0.07 --
Special charges -
restaffing and
postemployment
costs............. (0.07) -- (0.11) --
Special charges -
merger costs...... -- (0.09) -- (0.52)
Extraordinary items 0.03 -- 0.03 (0.06)
---------- ---------- ----------- -----------
Total............ $ 0.42 $ 0.40 $ 2.30 $ 1.54
========== ========== =========== ===========
Certain items in the 2000 income statements have been reclassified to
conform to the 2001 presentation. These reclassifications had no
effect on net income or earnings per share.
See Notes to Consolidated Financial Statements
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 (Unaudited) 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. Note 1. Significant Factors Affecting Operating Results The following table summarizes the earnings-per-share contributions of Xcel Energy's businesses.
3 Mos. Ended Year Ended
------------------ ------------------
12/31/01 12/31/00 12/31/01 12/31/00
-------- -------- -------- --------
Utility before unusual items $ 0.42 $ 0.42 $ 1.91 $ 1.70
Conservation incentive
adjustment 0.00 0.00 0.07 0.00
Special charges-restaffing and
postemployment costs (0.07) 0.00 (0.11) 0.00
Special charges-merger costs 0.00 (0.09) 0.00 (0.44)
Extraordinary items 0.03 0.00 0.03 (0.06)
----- ----- ----- -----
Total Utility $ 0.38 $ 0.33 $ 1.90 $ 1.20
Nonregulated / holding company
before special charges 0.04 0.07 0.40 0.42
Special charges -merger costs 0.00 0.00 0.00 (0.08)
----- ----- ----- -----
Total Nonregulated / holding
company 0.04 0.07 0.40 0.34
----- ----- ----- -----
Total EPS $ 0.42 $ 0.40 $ 2.30 $ 1.54
===== ===== ===== =====
EPS before unusual items $ 0.46 $ 0.49 $ 2.31 $ 2.12
===== ===== ===== =====
Special Charges 2000 Merger Costs - During the third quarter and fourth quarter of 2000, Xcel Energy expensed pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern special charges of $241 million, or 52 cents per share, for costs related to the merger between NSP and NCE. Of these special charges, approximately 44 cents per share were associated with the costs of merging regulated operations and 8 cents per share were associated with merger impacts on nonregulated activities. 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. 2001 Restaffing - During the fourth quarter of 2001, Xcel Energy expensed pretax special charges of $39 million, or 7 cents per share, for expected staff consolidation costs. The charges related to 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 costs for utility operations resulting from restaffing plans of several operating and corporate support areas of Xcel Energy. Approximately 500 staff terminations are expected to occur, mainly in the first quarter of 2002, across all regions of Xcel Energy's service territory, but primarily in Minneapolis and Denver Denver, city (1990 pop. 467,610), alt. 5,280 ft (1,609 m), state capital, coextensive with Denver co., N central Colo., on a plateau at the foot of the Front Range of the Rocky Mts., along the South Platte River where Cherry Creek meets it; inc. 1861. . 2001 Postemployment Benefits - Earnings for the year ended Dec. 31, 2001, were decreased by 4 cents per share due to a Colorado Supreme Court The Colorado Supreme Court is the highest court in the U.S. state of Colorado. It consists of a Chief Justice and six Associate Justices. Powers and duties Appellate jurisdiction decision that resulted in a pretax 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 $23 million of regulatory assets related to deferred postemployment benefit costs at Public Service Company of Colorado Colorado, state, United States Colorado (kŏlərăd`ə, –răd`ō, –rä`dō), state, W central United States, one of the Rocky Mt. states. (PSCo), a wholly owed utility subsidiary of Xcel Energy. These costs had been deferred in 1994 upon adoption of Statement of Financial Accounting Standard (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 ) No. 112 - "Employers Accounting for Postemployment Benefits" in that year. Requests for regulatory recovery were filed in 1996 and 1997 and were denied by the Colorado Public Utility Commission (CPUC CPUC California Public Utilities Commission CPUC Current Procurement Unit Cost ). An appeal to the Denver District Court resulted in affirmation A solemn and formal declaration of the truth of a statement, such as an Affidavit or the actual or prospective testimony of a witness or a party that takes the place of an oath. An affirmation is also used when a person cannot take an oath because of religious convictions. of the CPUC decision. On July July: see month. 2, 2001, the Colorado Supreme Court affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the District Court decision. Accordingly, PSCo wrote off $23 million of regulatory assets related to deferred postemployment benefit costs during the second quarter of 2001. Conservation Incentive Adjustment Earnings for the year ended Dec. 31, 2001, were increased by 7 cents per share due to the reversal of a 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 ) decision. In June June: see month. 1999, the MPUC denied NSP-Minnesota, a wholly owned subsidiary 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, 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 in 1999, which reduced earnings by 7 cents per share, based on this action. NSP-Minnesota appealed the MPUC decision and in December December: see month. 2000, the 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 Court of Appeals reversed the MPUC decision. 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. . On Feb. 23, 2001, the Minnesota Supreme Court declined to hear the MPUC's appeal. During the second quarter of 2001, NSP-Minnesota filed with the MPUC a plan that carried out, among other things, the court's decision. On June 28, 2001, the MPUC approved the plan and issued an order to that effect shortly thereafter. As a result, the previously recorded liabilities of approximately $41 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 are no longer required. This accounting adjustment increased revenue by approximately $35 million and increased allowance for funds used during construction (equity and debt) by approximately $6 million, increasing earnings by 7 cents per share for the second quarter of 2001. Extraordinary Items 2000 Electric Utility Restructuring Impacts - In the second quarter of 2000, Southwestern Public Service Co. (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. ), a wholly owned utility subsidiary of Xcel Energy, 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 No. 71 - "Accounting for the Effects of Certain Types of Regulation" for the generation portion of its business. This change resulted from both legislative and regulatory developments in Texas and 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). , which addressed the implementation of electric utility restructuring. During the second quarter of 2000, SPS wrote off its generation-related regulatory assets and other deferred costs, totaling approximately $19.3 million. This resulted in an after-tax extraordinary charge of approximately $13.7 million against the earnings of Xcel Energy and SPS. During the third quarter of 2000, SPS completed 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 its first mortgage indenture An agreement declaring the benefits and obligations of two or more parties, often applicable in the context of Bankruptcy and bond trading. The term indenture primarily describes secured contracts and has several applications in U.S. law. and recorded a charge of $8.2 million before tax, or $5.3 million after tax, for the generation-related portion of its defeasance costs. 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. 2001 Electric Utility Restructuring Delays - During early 2001, legislation in both Texas and New Mexico was passed that delayed the planned implementation of restructuring within SPS' service territory for at least five years. Accordingly, in the second quarter of 2001, SPS reapplied the provisions of SFAS No. 71 for its generation business. At that time, SPS did not restore any regulatory assets or other costs previously written off due to the uncertainty of various regulatory issues, including transition plans to address future rate recovery of SPS' restructuring costs. During the fourth quarter of 2001, SPS completed a $500-million medium-term debt financing Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay with the proceeds used to reduce 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. borrowings that had resulted from the 2000 defeasance. In its regulatory filings and communications, SPS has proposed to amortize amortize To write off gradually and systematically a given amount of money within a specific number of time periods. For example, an accountant amortizes the cost of a long-term asset by deducting a portion of that cost against income in each period. its defeasance costs over the five-year life of the refinancing Refinancing An extension and/or increase in amount of existing debt. , consistent with historical ratemaking rate·mak·ing n. The practice of establishing rates of payment, as for public transportation or utilities. rate , and has requested incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. rate recovery of $25 million of other restructuring costs. These non-financing restructuring costs have been deferred and will be amortized in the future consistent with rate recovery. Rate proceedings in Texas and New Mexico are pending to determine the recovery of SPS' restructuring costs and management believes it will be allowed full recovery of its prudently incurred costs. Based on these fourth-quarter events and the corresponding reduced uncertainty surrounding sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. the financial impacts of the delay in restructuring, SPS restored certain regulatory assets (including defeasance costs) totaling $17.6 million as of Dec. 31, 2001, and reported related extraordinary income of $11.8 million, or 3 cents per share. Regulatory assets previously written off in 2000 were restored only for items currently being recovered in rates and items where future rate recovery is considered probable. SFAS 133 - "Accounting for Derivative Instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. and Hedging Activities" During the first quarter of 2001, Xcel Energy adopted SFAS 133, which establishes accounting and reporting standards for derivative instruments. Xcel Energy's earnings for the fourth quarter of 2001 were increased by approximately $23.8 million (net of minority interest and after tax), or 7 cents per share, primarily at 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 , due to the mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. impacts of SFAS 133 on the valuation of derivative instruments. Xcel Energy's earnings for the year 2001 were increased by approximately $9.8 million (net of minority interest and after tax), or 3 cents per share, primarily at NRG, due to the mark-to-market impacts of SFAS 133 on the valuation of derivative instruments. The earnings impact for the adoption of SFAS 133 as of Jan. 1, 2001, was less than $1 million and is not being reported separately as a cumulative effect of accounting change due to immateriality im·ma·te·ri·al·i·ty n. pl. im·ma·te·ri·al·i·ties 1. The state or quality of being immaterial. 2. Something immaterial. Noun 1. . NRG is a publicly traded independent power producer, which represents Xcel Energy's largest interest in a nonregulated business. Utility and Energy Trading Operations 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)
-----------------------------
2001 2000 2001
Earnings per Share for the vs. vs. vs.
Period ended Dec. 31: Normal Normal 2000
-------------------- ------ ------ ----
Quarter Ended ($0.06) $0.05 ($0.11)
Year Ended $0.00 $0.01 ($0.01)
Sales Growth - The following table summarizes Xcel Energy's regulated growth for actual and weather normalized electric and gas sales for the three-month period and year ended Dec. 31, 2001, compared with the same periods in 2000.
Fourth Quarter Year Ended
-------------- ----------
Actual Normalized Actual Normalized
------ ---------- ------ ----------
Electric Residential (8.3)% (1.3)% 0.7% 0.4%
Electric Commercial & Industrial (1.4)% 0.3% 1.3% 1.3%
Total Retail Electric Sales (3.4)% (0.2)% 1.0% 1.0%
Electric Sales for Resale(a) 65.9% (b) 6.7% (b)
Total Firm Gas Sales (18.8)% 2.3% 0.7% 2.6%
Total Gas Sales (11.1)% (0.7)% (2.0)% (1.1)%
(a) Proprietary trading sales not included.
(b) Not available.
Electric Utility and Commodity Trading Margins - The following table details the changes in revenues and margin from Xcel Energy's electric utility and trading operations for the quarters and years ended Dec. 31:
Short- Inter-
term Electric Gas company Consoli-
(Millions of Electric Whole- Commodity Commodity Elimi- dated
dollars) Utility sale Trading Trading nations Total
----------------------------------------------------------------------
3 months ended
12/31/2001
Electric utility
revenue........ $ 1,270 $ 114 $ -- $ -- $ -- $ 1,384
Electric and gas
trading
revenue........ -- -- 262 414 (13) 663
Electric fuel
and purchased
power-
utility........ (515) (84) -- -- -- (599)
Electric and gas
trading costs.. -- -- (269) (409) 13 (665)
-----------------------------------------------------
Gross margin
before
operating
expenses....... $ 755 $ 30 $ (7) $ 5 $ -- $ 783
=====================================================
Margin as a
percentage of
revenue........ 59.4% 26.3% (2.7%) 1.2% -- 38.3%
3 months ended
12/31/2000
Electric utility
revenue........ $ 1,314 $ 197 $ -- $ -- $ -- $ 1,511
Electric and gas
trading
revenue........ -- -- 422 499 (22) 899
Electric fuel
and purchased
power-
utility........ (590) (176) -- -- -- (766)
Electric and gas
trading costs.. -- -- (416) (494) 22 (888)
-----------------------------------------------------
Gross margin
before
operating
expenses....... $ 724 $ 21 $ 6 $ 5 $ -- $ 756
=====================================================
Margin as a
percentage of
revenue........ 55.1% 10.7% 1.4% 1.0% -- 31.4%
Year ended
12/31/2001
Electric utility
revenue........ $ 5,607 $ 788 $ -- $ -- $ -- $ 6,395
Electric and gas
trading
revenue........ -- -- 1,337 1,938 (88) 3,187
Electric fuel
and purchased
power-
utility........ (2,559) (613) -- -- -- (3,172)
Electric and gas
trading costs.. -- -- (1,268) (1,918) 88 (3,098)
-----------------------------------------------------
Gross margin
before
operating
expenses....... $ 3,048 $ 175 $ 69 $ 20 $ -- $ 3,312
=====================================================
Margin as a
percentage of
revenue........ 54.4% 22.2% 5.2% 1.0% -- 34.6%
Year ended
12/31/2000
Electric utility
revenue........ $ 5,107 $ 567 $ -- $ -- $ -- $ 5,674
Electric and gas
trading
revenue........ -- -- 819 1,297 (54) 2,062
Electric fuel
and purchased
power-
utility........ (2,106) (475) -- -- -- (2,581)
Electric and gas
trading costs.. -- -- (788) (1,287) 54 (2,021)
-----------------------------------------------------
Gross margin
before
operating
expenses....... $ 3,001 $ 92 $ 31 $ 10 $ -- $ 3,134
=====================================================
Margin as a
percentage of
revenue........ 58.8% 16.2% 3.8% 0.8% -- 40.5%
Table Note 1 - The trading margins reflect the impact of the
regulatory sharing of certain trading margins under the Incentive Cost
Adjustment in Colorado.
Electric and gas commodity trading margins consist of non-asset-based electric trading at PSCo and natural gas trading at e prime, a wholly owned natural gas marketing and trading subsidiary. The ($7)-million electric commodity trading margin in the fourth quarter of 2001 reflects a year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. adjustment to reclassify Verb 1. reclassify - classify anew, change the previous classification; "The zoologists had to reclassify the mollusks after they found new species" class, classify, sort out, assort, sort, separate - arrange or order by classes or categories; "How would you $13 million of revenue to short-term wholesale. Electric and gas commodity trading margin, excluding the adjustment, was unchanged, quarter over quarter, and increased approximately $48 million for the year ended Dec. 31, 2001, compared with 2000. The increase reflects an expansion of Xcel Energy's trading operations and favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. market conditions, including strong prices in the western markets, particularly before the establishment of pricing caps. Electric utility and short-term wholesale margins (i.e. asset-based transactions) increased approximately $27 million for the fourth quarter of 2001, excluding the reclassification Reclassification The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. of $13 million from electric commodity trading revenue, and increased approximately $130 million for the year ended Dec. 31, 2001, compared with 2000. Electric utility margin for the fourth quarter of 2001 reflects the impact of 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. 2001 conservation incentive revenues and lower 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. for regulatory incentive mechanisms, partially offset by unfavorable temperatures. The increase for the year ended Dec. 31, 2001, reflects more favorable temperatures, retail sales growth, as well as the impact of the conservation incentive adjustment for prior periods as previously discussed. The increase for the year 2001 was partially offset by unrecovered production costs in various jurisdictions. Other Operating and Maintenance Expenses - Utility - Utility operating and maintenance expense for the fourth quarter of 2001 declined approximately $12.6 million, or 3.2 percent, compared with 2000, primarily due to the transfer of refuse-derived fuel Refuse-derived fuel (RDF) or solid recovered fuel/ specified recovered fuel (SRF) is a fuel produced by shredding municipal solid waste (MSW) or steam pressure treating in an autoclave. operations to NRG. Utility operating and maintenance expense for the year ended Dec. 31, 2001, increased by approximately $59.9 million, or 4.1 percent, compared with the same period in 2000. The change is largely due to increased plant outages, costs to establish the Nuclear Management Co. and to maintain operational excellence at the nuclear plants, bad debt reserves reflecting higher energy prices, increased costs due to customer growth and higher performance-based incentive costs. Nonregulated and Holding Company Operations The following table summarizes the earnings-per-share contributions of Xcel Energy's nonregulated businesses and holding company costs.
3 Mos. Ended Year Ended
------------------ -------------------
12/31/01 12/31/00 12/31/01 12/31/00
-------- -------- --------- --------
NRG Energy Inc. $ 0.09 $ 0.10 $ 0.58 $ 0.46
Yorkshire Power 0.00 0.01 0.01 0.13
Seren Innovations Inc. (0.02) (0.01) (0.08) (0.07)
e prime 0.00 0.00 0.02 (0.02)
Planergy International (0.02) (0.02) (0.04) (0.08)
Financing Costs & Preferred
Dividends (0.02) (0.02) (0.11) (0.07)
Other 0.01 0.01 0.02 (0.01)
----- ----- ----- -----
Total
Nonregulated/ Holding
Company $ 0.04 $ 0.07 $ 0.40 $ 0.34
===== ===== ===== =====
NRG - NRG's earnings decreased for the fourth quarter of 2001 due to the effects of lower prices for power, a slow U.S. economy and warmer weather patterns impacting demand. Partially offsetting these factors were mark-to-market impacts of FAS 133 and a change in the effective tax rate. The earnings increase for the year ended Dec. 31, 2001, was primarily due to new acquisitions in Europe and North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . In addition, NRG's earnings were enhanced due to a reduction in the overall effective tax rate and mark-to-market gains related to FAS 133. At Dec. 31, 2001, Xcel Energy owned approximately 74 percent of NRG. Xcel Energy owned 100 percent of NRG until the second quarter of 2000, when NRG completed its initial public offering, and 82 percent until a secondary offering was completed in March 2001. The NRG earnings for the quarter and year ended Dec. 31, 2001, exclude earnings of approximately 3 cents per share and 19 cents per share, respectively, related to minority shareholder interests. In comparison, NRG earnings for the quarter and year ended Dec. 31, 2000, exclude earnings of approximately 2 cents per share and 8 cents per share, respectively, related to minority shareholder interests. Yorkshire Power - During February 2001, Xcel Energy reached an agreement to sell the majority of its investment in Yorkshire Power to Innogy Holdings plc. As a result of this sales agreement, Xcel Energy did not record any equity earnings from Yorkshire Power after January 2001. In April 2001, Xcel Energy closed the sale of Yorkshire Power. Xcel Energy retains an interest of approximately 5 percent in Yorkshire Power to comply with pooling-of-interests accounting requirements associated with the merger of NSP and NCE in 2000. Seren Seren Chlordiazepoxide, see there - Construction 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 Minnesota and California resulted in losses for the years ended Dec. 31, 2001 and 2000 for Seren. Seren is constructing a combination cable television, telephone and high-speed Internet See broadband. access system in two locations: St. Cloud, Minn., and Contra Costa Contra Costa can refer to:
Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. $190 million for plant in service and had incurred another $60 million for construction work in progress for these systems at Dec. 31, 2001. The majority of the system construction in St. Cloud is complete. Management is continuing to evaluate the strategic fit of Seren in Xcel Energy's business portfolio. e prime - e prime's results for the year ended Dec. 31, 2001, reflect the favorable structure of its contractual portfolio, including storage and transportation positions, structured products and proprietary trading Proprietary Trading When a firm trades for direct gain instead of commission dollars. Essentially, the firm has decided to profit from the market rather than commissions from processing trades. in natural gas markets. e prime's results for the year ended Dec. 31, 2000, were reduced by special charges of 2 cents per share for contractual obligations and other costs associated with post-merger changes. Planergy International - Planergy is a wholly owned energy management, consulting and demand-side management services subsidiary of Xcel Energy. Planergy's results for the year ended Dec. 31, 2000, were reduced by 4 cents per share for the write-offs of goodwill and project development costs. During the third quarter of 2000, the operations of Planergy and 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. , wholly owned subsidiaries of Xcel Energy, were combined and now do business as Planergy International. As a result of this merger, Planergy 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 of $22 million (before tax) of goodwill and project development costs. 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 2001 included Xcel Energy subsidiary results of approximately 3 cents per share associated with Eloigne ELOIGNE, practice. This word signifies, literally, to remove to a distance; to remove afar off. It is used as a return to a writ of replevin, when the chattels have been removed out of the way of the sheriff. Vide Elongata. Company, an affordable housing subsidiary, offset by a loss at Xcel Energy International, an international independent power production subsidiary of Xcel Energy. The Other nonregulated results for the year ended Dec. 31, 2000, include approximately 2 cents per share of losses associated with Xcel Energy International. Nonoperating Items Interest Income and Other - Net - Interest income and other - net increased by approximately $54 million for the year ended Dec. 31, 2001 compared with the same period in 2000. This increase was primarily the result of a credit swap at NRG, NRG mark-to-market gains on foreign debt, NRG interest income due to increased affiliate receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed related to loans to West Coast Power and gains from the sale of PSCo assets. Income Taxes - Xcel Energy's effective tax rate was 30.0 percent for the year ended Dec. 31, 2001 and 35.8 percent for the same period in 2000. The change in the effective tax rate between years reflects changes in the 2001 effective tax rate at NRG and the non-deductibility of certain merger costs in 2000. NRG's annual effective tax rate for 2001 was revised in the fourth quarter from prior estimates due to the implementation of state tax planning Tax planning Devising strategies throughout the year in order to minimize tax liability, for example, by choosing a tax filing status that is most beneficial to the taxpayer. strategies and a higher percentage of NRG's overall earnings derived from foreign projects in lower tax jurisdictions. In addition, NRG abandoned development efforts on certain foreign projects resulting in an incremental tax benefit being recognized during the fourth quarter of 2001. Comparable effective tax rates (excluding extraordinary items) were 7.1 percent for the fourth quarter of 2001, compared to 31.1 percent for the fourth quarter of 2000. Note 2. NRG Acquisitions Completed Asset Acquisitions Audrain - In June 2001, NRG purchased an approximately 640-megawatt, natural gas-fired power plant in Audrain County, Missouri Audrain County is a county located in the U.S. state of Missouri. As of 2000, the population was 25,853. Its county seat is Mexico6. The county was organized in 1836. Tradition says the county was named for settler Samuel Audrain. , from Duke Energy North America LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control . Brazos Valley The Brazos Valley is a region in the U.S. state of Texas (Central Texas) consisting of Brazos County, Robertson County, Grimes County, Washington County, Burleson County, Madison County, and Leon County, with Brazos County and the cities of College Station and Bryan at its center. - In June 2001, NRG closed on the construction financing for a 633-megawatt, gas-fired power plant in Texas that NRG will build, operate and manage. At the time of the closing, NRG also became the 100- percent owner of the project by purchasing STEAG Power LLC's 50-percent interest in the project. NRG estimates that its investment in the project will total approximately $170 million. NRG expects the project to begin commercial operation in February 2003. Conectiv - In June 2001, NRG purchased 1,081 megawatts of interests in power generation plants from a subsidiary of Conectiv for approximately $644 million. NRG acquired a 100-percent interest in the 784-megawatt, coal-fired Indian River Indian River, lagoon, c.100 mi (160 km) long, E Fla., parallel to the east coast from N of Titusville to Stuart. Along the lagoon a variety of citrus and vegetable products are grown and transported by small boats to towns on its waterway and those further inland. Generating Station, located in Delaware Delaware, state, United States Delaware (dĕl`əwâr, –wər), one of the Middle Atlantic states of the United States, the country's second smallest state (after Rhode Island). , and in the 170-megawatt, oil-fired Vienna Generating Station, located in Maryland Maryland (mâr`ələnd), one of the Middle Atlantic states of the United States. It is bounded by Delaware and the Atlantic Ocean (E), the District of Columbia (S), Virginia and West Virginia (S, W), and Pennsylvania (N). . In addition, NRG acquired 64 megawatts of the 1,711-megawatt, coal-fired Conemaugh Generating Station Conemaugh Generating Station is a power plant at Seward, Pennsylvania. It has 2 305 metre tall chimneys. External links
• and 63 megawatts of the 1,711-megawatt, coal-fired Keystone key·stone n. 1. Architecture The central wedge-shaped stone of an arch that locks its parts together. Also called headstone. 2. The central supporting element of a whole. Generating Station, both located near Pittsburgh, Penn. South American Assets - In June 2001, NRG acquired Vattenfall's interests in three South American projects. Those projects consist of Compania Boliviana de Energia Electrica S.A. - Bolivian Power Company Ltd. (COBEE) and Compania Electrica Central Bulo Bulo S.A., both in Bolivia, and Itiquira Energetica S.A. in Brazil. In addition, NRG acquired the ownership interest of Inepar Energia S.A. (Inepar) in the Itiquira project. NRG now owns 98.9 percent of COBEE, 60 percent of Bulo Bulo and 99 percent of the common shares of Itiquira. COBEE, with 220 megawatts of predominantly pre·dom·i·nant adj. 1. Having greatest ascendancy, importance, influence, authority, or force. See Synonyms at dominant. 2. hydroelectric generation, is the second largest electric generator generator, in electricity, machine used to change mechanical energy into electrical energy. It operates on the principle of electromagnetic induction, discovered (1831) by Michael Faraday. in Bolivia. Bulo Bulo is an 88-megawatt, natural gas-fired facility in Bolivia. Itiquira is a 156-megawatt, hydroelectric project in the advanced stage of construction in Brazil. Full commercial operation of Itiquira is expected in March 2002. European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. Assets - In June 2001, NRG purchased a 389-megawatt, gas-fired power plant and a 116-megawatt, thermal power plant, both of which are located in Hungary, from PowerGen. In April 2001, NRG also purchased PowerGen's interest in Saale Energie GmbH and MIBRAG BV. By acquiring PowerGen's interest in Saale Energie, NRG increased its ownership interest in the 960-megawatt, coal-fired Schkopau power station The Schkopau Power Station is a German lignite-fired power station in the proximity of the local part Korbetha of the municipality Schkopau in the district Merseburg Querfurt (Saxonia-Anhalt). The E.ON AG belongs and has an electrical output distributed of 900 megawatts on two blocks. , located in Germany, from 200 megawatts to 400 megawatts. By acquiring PowerGen's interest in MIBRAG, consisting primarily of two lignite lignite (lĭg`nīt) or brown coal, carbonaceous fuel intermediate between coal and peat, brown or yellowish in color and woody in texture. mines and three power stations in Germany, NRG increased its ownership of MIBRAG from 33.3 percent to 50 percent. NRG paid approximately $190 million to PowerGen for all of these interests. Hsin Yu The Hsin Yu was a Chinese Army transport ship that served during World War I. The 1,629 ton ship had been built in 1889. On April 22, 1916, the transport, with over a thousand enlisted men and officers on board, was in a thick fog while on its way to Foo Chow. - In July 2001, NRG acquired approximately 60 percent of Hsin Yu Energy Development Co. Ltd, a Taiwan company that owns and develops power generation facilities. Hsin Yu currently owns a 170-megawatt 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. facility, Hsinchu Phase I. Hsin Yu is developing a 245-megawatt expansion of the Hsinchu facility and a new 490-megawatt greenfield project For other uses, see Greenfield (disambiguation). In software engineering jargon, a greenfield is a project which lacks any constraints imposed by prior work. The image is that of construction on greenfield land, where there is no need to remodel or demolish an existing . McClain - In August 2001, NRG acquired Duke Energy's 77-percent interest in the 520-megawatt, natural gas-fired McClain Energy Generating Facility, located in Oklahoma, for approximately $277 million. The Oklahoma Municipal Power Authority owns the remaining 23-percent interest. Indeck - In August 2001, NRG acquired an approximately 2,255-megawatt portfolio of operating projects and projects in advanced development that are located in Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. and upstate New York Upstate New York is the region of New York State north of the core of the New York metropolitan area. It has a population of 7,121,911 out of New York State's total 18,976,457. Were it an independent state, it would be ranked 13th by population. from Indeck Energy Services, Inc. Approximately 402 megawatts are currently in operation and NRG expects that an additional $1.3 billion will be required to complete construction of the projects. Meriden - In August 2001, NRG acquired a 540-megawatt, natural gas-fired generation facility being developed 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). . NRG estimates it will cost approximately $384 million to complete construction of the plant, which has a planned commercial operation date of June 2003. Termorio - In September 2001, NRG acquired a 50-percent interest in Termorio SA, a 1,040-megawatt, gas-fired cogeneration facility currently under construction in Rio de Janeiro Rio de Janeiro, city, Brazil Rio de Janeiro (rē`ō də zhänā`rō, Port. rē`  thĭ zhənĕē`r State, Brazil, from Petroleos
Brasileiros SA. Commercial operation of the facility is expected to
begin in March 2004.Commonwealth Atlantic and James River James River or Dakota River River in the U.S. rising in central North Dakota and flowing southeast across South Dakota. It joins the Missouri River about 5 mi (8 km) below Yankton after a course of 710 mi (1,140 km). - In January 2002, NRG acquired from Edison Mission Energy a 50 percent interest in the 375-megawatt Commonwealth Atlantic gas and oil-fired generating station located near Chesapeake, Virginia Chesapeake is an independent city located in the South Hampton Roads region of eastern Virginia in the United States. One of the Seven Cities of Hampton Roads, Chesapeake was formed in 1963 by a political consolidation of the City of South Norfolk with the former Norfolk County, , and a 50-percent interest in the 110-megawatt James River coal-fired generating facility in Hopewell, Virginia Hopewell is an independent city in the Commonwealth of Virginia. The population was 22,354 at the 2000 census. It is in Tri-Cities area of the Richmond-Petersburg region and is a portion of the Richmond Metropolitan Statistical Area (MSA). . Pending NRG Asset Acquisitions Conectiv - In June 2001, NRG extended purchase agreements that it had entered into with a subsidiary of Conectiv to acquire 794 megawatts of coal and oil-fired electric generating capacity and other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. in New Jersey and Pennsylvania Pennsylvania (pĕnsəlvā`nyə), one of the Middle Atlantic states of the United States. It is bordered by New Jersey, across the Delaware River (E), Delaware (SE), Maryland (S), West Virginia (SW), Ohio (W), and Lake Erie and New York , including an additional 66 megawatts of the Conemaugh Generating Station and an additional 42 megawatts of the Keystone Generating Station. NRG will pay approximately $180 million for these assets. NRG expects the acquisition to close in the first quarter of 2002, following approval of the New Jersey Board of Public Utilities The New Jersey Board of Public Utilities (NJBPU) is a regulatory authority in New Jersey charged with the responsibility of seeing that "safe, adequate, and proper utility services are provided at reasonable rates for customers in New Jersey. . FirstEnergy - In November 2001, NRG signed asset purchase and sale agreements with subsidiaries of FirstEnergy Corp. to acquire a 2,535-megawatt portfolio of generating assets. NRG agreed to pay approximately $1.5 billion for four primarily coal-fueled generating stations located along Lake Erie Lake Erie Great Lake; once so polluted, referred to as Lake Eerie. [Am. Hist.: NCE, 887] See : Filth , near Cleveland and Toledo, Ohio
Note 3. 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 - NRG's California generation assets include a 57.67-percent interest in Crockett Cogeneration (Crockett), a 39.5-percent interest in the Mt. Poso facility and a 50-percent interest in the West Coast Power partnership with Dynegy. In March 2001, the California PX filed for bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most under Chapter 11 of the Bankruptcy Code Bankruptcy Code may refer to:
An individual or institution that lends money without obtaining specified assets as collateral. This poses a higher risk to the creditor because they have nothing to fall back on should the borrower default on the loan. A debenture holder is an unsecured creditor. such as NRG's California affiliates would receive 60 percent of the amounts owed upon approval of the plan. The remaining 40 percent would be paid in negotiable NEGOTIABLE. That which is capable of being transferred by assignment; a thing, the title to which may be transferred by a sale and indorsement or delivery. 2. debt with terms from 10 to 30 years. The California Power Exchange's (PX) ability to repay its debt is dependent on the extent to which it receives payments from PG&E and Southern California Edison Southern California Edison (or SCE Corp), the largest subsidiary of Edison International (NYSE: EIX), is the primary electricity supply company for much of Southern California. It provides 11 million people with electricity. Company. On Dec. 21, 2001, the California bankruptcy court bankruptcy court n. the specialized Federal court in which bankruptcy matters under the Federal Bankruptcy Act are conducted. There are several bankruptcy courts in each state, and each one's territory covers several counties. affirmed the Mt. Poso and Crockett Power Purchase Agreements with PG&E and, in respect of the Crockett Power Purchase Agreement, approved a twelve-month repayment schedule of all past due amounts totaling $49.6 million, plus interest. The first payment of $6.2 million, including accrued interest Accrued Interest The interest that has accumulated on a bond since the last interest payment up to but not including the settlement date. There are two methods for calculating accrued interest: 1) 360-day year method, used for corporate and municipal bonds. , was received on Dec. 31, 2001. NRG's share of the net amounts owed to West Coast Power by the California ISO (1) See ISO speed. (2) (International Organization for Standardization, Geneva, Switzerland, www.iso.ch) An organization that sets international standards, founded in 1946. The U.S. member body is ANSI. and PX totaled approximately $85.1 million as of Dec. 31, 2001 compared with $101.8 million at Dec. 31, 2000. These amounts reflect NRG's share of (a) total amounts owed to West Coast Power less (b) amounts that are currently treated as disputed revenues and are not recorded as accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying in the financial statements of West Coast Power LLC, and reserves taken against accounts receivable that have been recorded in the financial statements. The decrease is primarily attributed to cash collections from the California ISO during the fourth quarter of 2001. Enron Enron A U.S. energy-trading and utilities company that housed one of the biggest accounting frauds in history. Enron's executives employed accounting practices that falsely inflated the company's revenues, which, at the height of the scandal, made the firm become the seventh - Xcel Energy does not expect a material impact to the results of its operations as a direct result of the Enron bankruptcy. At Dec. 31, 2001, e prime had a receivable from Enron of approximately $60 million and a payable to Enron of approximately $70 million. Under the industry standard agreements, that e prime and Enron utilize, e prime is able to net the payable against the receivable yielding a net payable of approximately $10 million. As a result, no provision for loss has been recorded. During the fourth quarter of 2001, NRG recorded a net after-tax expense of $6.7 million related to Enron's bankruptcy. This amount includes a $14.2-million, after-tax charge to establish bad debt reserves, which was partially offset by a $7.5-million, after-tax gain on a credit swap agreement entered into as part of NRG's credit risk management program. NRG has fully provided for its exposure to Enron; however, as with any receivable, NRG will pursue collection of all amounts outstanding through the ordinary course of business. In addition, an Enron subsidiary, NEPCO NEPCO Northeastern Power Company (McAdoo, PA) NEPCO North East Polish Community Organisation (UK) NEPCO Nekoosa-Edwards Paper Company , is serving as the construction contractor for two of NRG's greenfield Greenfield, town (1990 pop. 18,666), seat of Franklin co., NW Mass., at the confluence of the Deerfield and Green rivers, near their junction with the Connecticut; settled 1686, set off from Deerfield and inc. 1753. development projects, the Kendall Ken·dall , Edward Calvin 1886-1972. American biochemist. He shared a 1950 Nobel Prize for discoveries concerning the hormones of the adrenal cortex. and Nelson projects currently under construction in Illinois. Enron guaranteed NEPCO's obligations under the construction contracts. To date, the actual construction and engineering work on both projects has continued without disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. and NRG expects the projects to achieve commercial operations on schedule. NRG believes its overall construction costs will increase by no more than $50 million. Note 4. Financing Matters Xcel Energy Financing Sources and NRG Funding In December 2001, the Xcel Energy board of directors authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: an investment of $300 million in NRG, subject to various other approvals. The action was taken in part in response to the recent stock price declines experienced by NRG and other independent power producers, as well as the action by Moody's placing NRG on credit watch (see below). Credit Ratings In October 2001, Moody's Investors Service Moody's Investors Service A leading global credit rating, research and risk analysis firm. Moody's Investors Service A leading firm engaged in credit rating, risk analysis, and research of fixed-income securities and their issuers. downgraded Xcel Energy's commercial paper rating to Prime-2 from Prime-1 and affirmed Xcel Energy's A3 long term rating. In addition, Moody's downgraded its long- and short-term ratings for SPS to A3 (senior unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. )/Prime-2 and affirmed its long and short-term ratings for NSP - Minnesota to Aa3 (senior secured)/Prime-1. In December 2001, Moody's placed NRG's corporate securities under review for possible downgrade Downgrade A negative change in the rating of a security. Notes: For example, an analyst may downgrade a stock from strong buy to buy, or a bond rating agency may downgrade a bond from AAA to AA. following NRG's announcement of its planned acquisition of generation assets from FirstEnergy Corp. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Moody's, the review will address NRG's ability to finance the acquisition and the affect of the acquisition on NRG's liquidity and coverage ratios. In December 2001, Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. placed Xcel Energy on ratings "watch negative". According to Fitch fitch: see polecat. , the ratings watch for Xcel Energy reflects the potential heavy capital needs of NRG and the possibility that Xcel Energy may have to provide funding or credit support on behalf of NRG. The securities of NSP-Minnesota, NSP-Wisconsin and SPS were also placed on ratings "watch negative" in consideration of Fitch's policy regarding the linkage linkage In mechanical engineering, a system of solid, usually metallic, links (bars) connected to two or more other links by pin joints (hinges), sliding joints, or ball-and-socket joints to form a closed chain or a series of closed chains. between ratings of subsidiaries and the parent. Xcel Energy is committed to credit quality and continues to work with the credit rating agencies Credit Rating Agencies Firms that compile information on and issue public credit ratings for a large number of companies. to resolve these issues. Note 5. Tax Matters The Internal Revenue Service (IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. ) had issued a Notice of Proposed Adjustment proposing to disallow To exclude; reject; deny the force or validity of. The term disallow is applied to such things as an insurance company's refusal to pay a claim. interest expense deductions taken in tax years 1993 through 1997 related to corporate owned life insurance (COLI COLI Corporate-Owned Life Insurance COLI Cost of Living Index COLI Chemometrics On-line Initiative ) policy loans of PSR PSR Pulsar PSR Poster PSR Physicians for Social Responsibility PSR Psychosocial Rehabilitation PSR Pacific School of Religion PSR Policy and Survey Research PSR Project Study Report PSR Pre-Sentence Report PSR Pressure-State-Response PSR Puget Sound Region Investments, Inc. (PSRI PSRI Population Studies and Research Institute PSRI Photographic Society of Rhode Island PSRI Planetary Sciences Research Institute PSRI Particulate Solid Research Inc. (Chicago, IL) PSRI Poverty and Social Reform Institute ), a wholly owned subsidiary of PSCo. A request for technical advice from the IRS National Office with respect to the proposed adjustment had been pending. Xcel Energy recently received a technical advice memorandum from the IRS National Office, which communicated a position adverse to PSRI. Consequently, we expect the IRS examination division to begin the process of disallowing the interest expense deductions for the tax years 1993 through 1997. After consultation with tax counsel, it is Xcel Energy's position that the IRS determination is not supported by the tax law. Based upon this assessment, management continues to believe that the tax deduction Tax deduction An expense that a taxpayer is allowed to deduct from taxable income. tax deduction See deduction. of interest expense on the COLI policy loans is in full compliance with the tax law. Therefore, Xcel Energy intends to challenge the IRS determination, which could require several years to reach final resolution. Although the ultimate resolution of this matter is uncertain, management continues to believe the resolution of this matter will not have a material adverse impact on Xcel Energy's financial position, results of operations or cash flows. For this reason, PSRI has not recorded any provision for income tax or interest expense related to this matter and has continued to take deductions for interest expense related to policy loans on its income tax returns for subsequent years. The total disallowance dis·al·low tr.v. dis·al·lowed, dis·al·low·ing, dis·al·lows 1. To refuse to allow: "[The government] of interest expense deductions for the period of 1993 through 1997, as proposed by the IRS, is approximately $175 million. Additional interest expense deductions for the period 1998 through 2001 are estimated to total approximately $240 million. Should the IRS ultimately prevail on this issue, tax and interest payable through Dec. 31, 2001, would reduce earnings by an estimated $197 million or 57 cents per Xcel Energy share. In addition, pending resolution of this matter, annual earnings will continue to include tax benefits associated with the COLI policy loan interest deductions Interest deduction An interest expense, such as interest on a margin account, that is allowed as a deduction for tax purposes. . In 2002, these tax benefits are expected to contribute approximately $31 million, or 9 cents per share, to Xcel Energy earnings.
XCEL ENERGY INC.
Unaudited Earnings Release Summary
All dollars in thousands, except earnings per share
3 months ended Dec. 31 2001 2000
----------------------------------------------------------------------
Operating revenue $ 3,336,000 $ 3,694,000
Net income $ 145,000 $ 138,000
Earnings available for common shareholders $ 144,000 $ 137,000
Average shares - common and potentially
dilutive (1000's) 345,000 340,000
Earnings per share - diluted
Earnings before unusual items $0.46 $0.49
Conservation incentive adjustment $0.00 $0.00
Special charges- restaffing and
postemployment costs ($0.07) $0.00
Special charges- merger costs $0.00 ($0.09)
Extraordinary items $0.03 $0.00
----- -----
Total earnings per share $0.42 $0.40
===== =====
Year ended Dec. 31 2001 2000
----------------------------------------------------------------------
Operating revenue $15,028,000 $11,592,000
Net income $ 795,000 $ 527,000
Earnings available for common shareholders $ 791,000 $ 523,000
Average shares - common and potentially
dilutive (1000's) 344,000 338,000
Earnings per share - diluted
Earnings before unusual items $2.31 $2.12
Conservation incentive adjustment $0.07 $0.00
Special charges- restaffing and
postemployment costs ($0.11) $0.00
Special charges- merger costs $0.00 ($0.52)
Extraordinary items $0.03 ($0.06)
----- ------
Total earnings per share $2.30 $1.54
===== =====
Return on Equity, before unusual items 13.5% 13.2%
Return on Equity - total 13.4% 9.6%
Book value $17.98 $16.46
XCEL ENERGY INC.
2001 COMMODITY TRADING AND ELECTRIC UTILITY MARGINS BY QUARTER
All dollars in millions
Short- Electric
Electric term Commodity
Utility Wholesale Trading
----------------------------------------------------------------------
First Quarter 2001
Electric utility revenue................... $ 1,262 $ 286 $ --
Electric and gas trading revenue........... -- -- 326
Electric fuel and purchased power-utility.. (587) (201) --
Electric and gas trading costs............. -- -- (277)
--------------------------
Gross margin before operating expenses..... $ 675 $ 85 $ 49
==========================
Margin as a percentage of revenue.......... 53.5% 29.7% 15.0%
Second Quarter 2001
Electric utility revenue................... $ 1,453 $ 191 $ --
Electric and gas trading revenue........... -- -- 434
Electric fuel and purchased power-utility (682) (155) --
Electric and gas trading costs............. -- -- (413)
--------------------------
Gross margin before operating expenses..... $ 771 $ 36 $ 21
==========================
Margin as a percentage of revenue.......... 53.1% 18.8% 4.8%
Third Quarter 2001
Electric utility revenue................... $ 1,622 $ 197 $ --
Electric and gas trading revenue........... -- -- 315
Electric fuel and purchased power-utility.. (775) (173) --
Electric and gas trading costs............. -- -- (309)
--------------------------
Gross margin before operating expenses..... $ 847 $ 24 $ 6
==========================
Margin as a percentage of revenue.......... 52.2% 12.2% 1.9%
Fourth Quarter 2001
Electric utility revenue................... $ 1,270 $ 114 $ --
Electric and gas trading revenue........... -- -- 262
Electric fuel and purchased power-utility.. (515) (84) --
Electric and gas trading costs............. -- -- (269)
--------------------------
Gross margin before operating expenses..... $ 755 $ 30 $ (7)
==========================
Margin as a percentage of revenue.......... 59.4% 26.3% (2.7%)
Year ended 12/31/2001
Electric utility revenue................... $ 5,607 $ 788 $ --
Electric and gas trading revenue........... -- -- 1,337
Electric fuel and purchased power-utility.. (2,559) (613) --
Electric and gas trading costs............. -- -- (1,268)
--------------------------
Gross margin before operating expenses..... $ 3,048 $ 175 $ 69
==========================
Margin as a percentage of revenue.......... 54.4% 22.2% 5.2%
Inter-
Gas company Consoli-
Commodity Elimi- dated
Trading nations Total
----------------------------------------------------------------------
First Quarter 2001
Electric utility revenue................... $ -- $ -- $ 1,548
Electric and gas trading revenue........... 695 (54) 967
Electric fuel and purchased power-utility.. -- -- (788)
Electric and gas trading costs............. (694) 54 (917)
--------------------------
Gross margin before operating expenses..... $ 1 $ -- $ 810
==========================
Margin as a percentage of revenue.......... 0.1% -- 32.2%
Second Quarter 2001
Electric utility revenue................... $ -- $ -- $ 1,644
Electric and gas trading revenue........... 440 (5) 869
Electric fuel and purchased power-utility -- -- (837)
Electric and gas trading costs............. (429) 5 (837)
--------------------------
Gross margin before operating expenses..... $ 11 $ -- $ 839
==========================
Margin as a percentage of revenue.......... 2.5% -- 33.4%
Third Quarter 2001
Electric utility revenue................... $ -- $ -- $ 1,819
Electric and gas trading revenue........... 389 (16) 688
Electric fuel and purchased power-utility.. -- -- (948)
Electric and gas trading costs............. (386) 16 (679)
--------------------------
Gross margin before operating expenses..... $ 3 $ -- $ 880
==========================
Margin as a percentage of revenue.......... 0.8% -- 35.1%
Fourth Quarter 2001
Electric utility revenue................... $ -- $ -- $ 1,384
Electric and gas trading revenue........... 414 (13) 663
Electric fuel and purchased power-utility.. -- -- (599)
Electric and gas trading costs............. (409) 13 (665)
--------------------------
Gross margin before operating expenses..... $ 5 $ -- $ 783
==========================
Margin as a percentage of revenue.......... 1.2% -- 38.3%
Year ended 12/31/2001
Electric utility revenue................... $ -- $ -- $ 6,395
Electric and gas trading revenue........... 1,938 (88) 3,187
Electric fuel and purchased power-utility.. -- -- (3,172)
Electric and gas trading costs............. (1,918) 88 (3,098)
--------------------------
Gross margin before operating expenses..... $ 20 $ -- $ 3,312
==========================
Margin as a percentage of revenue.......... 1.0% -- 34.6%
Table Note 1 - The trading margins reflect the impact of the
regulatory sharing of certain trading margins under the Incentive Cost
Adjustment in Colorado.
Table Note 2 - The decline in electric commodity trading margin in the
fourth quarter of 2001 reflects a year-to-date adjustment of $13
million to reclassify revenues to short-term wholesale.
XCEL ENERGY INC.
2000 COMMODITY TRADING AND ELECTRIC UTILITY MARGINS BY QUARTER
All dollars in millions
Electric
Electric Short-term Commodity
Utility Wholesale Trading
----------------------------------------------------------------------
First Quarter 2000
Electric utility revenue......... $1,149 $64 $-
Electric and gas trading revenue. - - 45
Electric fuel and purchased
power-utility .................. (451) (48) -
Electric and gas trading costs... - - (41)
-------------------------------------
Gross margin before operating
expenses........................ $698 $16 $4
=====================================
Margin as a percentage of
revenue......................... 60.7% 25.0% 8.9%
Second Quarter 2000
Electric utility revenue......... $1,192 $91 $-
Electric and gas trading revenue. - - 102
Electric fuel and purchased
power-utility .................. (454) (67) -
Electric and gas trading costs... - - (92)
-------------------------------------
Gross margin before operating
expenses........................ $738 $24 $10
=====================================
Margin as a percentage of revenue 61.9% 26.4% 9.8%
Third Quarter 2000
Electric utility revenue......... $1,452 $215 $-
Electric and gas trading revenue. - - 250
Electric fuel and purchased
power-utility .................. (611) (184) -
Electric and gas trading costs... - - (239)
-------------------------------------
Gross margin before operating
expenses........................ $841 $31 $11
=====================================
Margin as a percentage of
revenue......................... 57.9% 14.4% 4.4%
Fourth Quarter 2000
Electric utility revenue......... $1,314 $197 $-
Electric and gas trading revenue. - - 422
Electric fuel and purchased
power-utility .................. (590) (176) -
Electric and gas trading costs... - - (416)
-------------------------------------
Gross margin before operating
expenses........................ $724 $21 $6
=====================================
Margin as a percentage of revenue 55.1% 10.7% 1.4%
Year ended 12/31/2000
Electric utility revenue......... $5,107 $567 $-
Electric and gas trading revenue. - - 819
Electric fuel and purchased
power-utility .................. (2,106) (475) -
Electric and gas trading costs... - - (788)
-------------------------------------
Gross margin before operating
expenses........................ $3,001 $92 $31
=====================================
Margin as a percentage of revenue 58.8% 16.2% 3.8%
Gas
Commodity Intercompany Consolidated
Trading Eliminations Total
-------------------------------------
First Quarter 2000
Electric utility revenue......... $- $- $1,213
Electric and gas trading revenue. 184 (1) 228
Electric fuel and purchased
power-utility .................. - - (499)
Electric and gas trading costs... (183) 1 (223)
-------------------------------------
Gross margin before operating
expenses........................ $1 $- $719
=====================================
Margin as a percentage of
revenue......................... 0.5% - 49.9%
Second Quarter 2000
Electric utility revenue......... $- $- $1,283
Electric and gas trading revenue. 273 (8) 367
Electric fuel and purchased
power-utility .................. - - (521)
Electric and gas trading costs... (271) 8 (355)
-------------------------------------
Gross margin before operating
expenses........................ $2 $- $774
=====================================
Margin as a percentage of
revenue......................... 0.7% - 46.9%
Third Quarter 2000
Electric utility revenue......... $- $- $1,667
Electric and gas trading revenue. 341 (23) 568
Electric fuel and purchased
power-utility .................. - - (795)
Electric and gas trading costs... (339) 23 (555)
-------------------------------------
Gross margin before operating
expenses........................ $2 $- $885
=====================================
Margin as a percentage of
revenue......................... 0.6% - 39.6%
Fourth Quarter 2000
Electric utility revenue......... $- $- $1,511
Electric and gas trading revenue. 499 (22) 899
Electric fuel and purchased
power-utility .................. - - (766)
Electric and gas trading costs... (494) 22 (888)
-------------------------------------
Gross margin before operating
expenses........................ $5 $- $756
=====================================
Margin as a percentage of
revenue......................... 1.0% - 31.4%
Year ended 12/31/2000
Electric utility revenue......... $- $- $5,674
Electric and gas trading revenue. 1,297 (54) 2,062
Electric fuel and purchased
power-utility .................. - - (2,581)
Electric and gas trading costs... (1,287) 54 (2,021)
-------------------------------------
Gross margin before operating
expenses........................ $10 $- $3,134
=====================================
Margin as a percentage of
revenue......................... 0.8% - 40.5%
Table Note 1 - The trading margins reflect the impact of the
regulatory sharing of certain trading margins under the Incentive Cost
Adjustment in Colorado.
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