Xcel Energy Reports Strong Utility Results for First Quarter.Business Editors MINNEAPOLIS--(BUSINESS WIRE)--April 29, 2003 Xcel Energy Inc.'s preliminary earnings for first quarter of 2003 were $192 million, or $0.48 per share, including results of subsidiary 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 , compared with $102 million, or $0.29 per share, for the same period in 2002. Xcel Energy's pro-forma earnings Pro-Forma Earnings Projected earnings based on a set of assumptions and often used to present a business plan (in Latin pro forma means "for the sake of form"). It also refers to earnings which exclude non-recurring items. Pro-forma earnings are not derived by standard GAAP methods. from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the , excluding NRG's operating results and a gain on the sale of subsidiary Viking Gas Transmission Viking Gas Transmission is a natural gas pipeline which takes gas from TransCanada pipeline in Minnesota and brings it to Wisconsin. It is owned by ONEOK Partners. Its FERC code is 82. Company, were $131 million, or $0.33 per share, in the first quarter of 2003, compared with $122 million, or $0.35 per share, for the same period in 2002. For a reconciliation of the pro-forma earnings to net income on the basis of generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting , see Note 1. Total earnings increased due to discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. gains related to NRG's disposal of its Killingholme project and to the sale of Viking Gas. Earnings also increased for the first quarter of 2003, compared with the same period in 2002, due to sales growth at all four of Xcel Energy's largest operating utilities. These increases were partially offset by significantly increased operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. 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 . Xcel Energy considers its and NRG's results to be preliminary pending evaluation of a regulatory decision related to NRG (see Note 1). "We continue to produce strong results at our utilities," said Wayne Brunetti, Xcel Energy's chairman, president and chief executive officer. "Electric utility sales growth from our retail customers and higher 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. wholesale margins were the drivers of the increase in electric utility margin in the first quarter of 2003. Our favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. utility results reinforce our belief in our business plan, and our ability to deliver on our financial commitments to our shareholders." Brunetti said the company requested a waiver The voluntary surrender of a known right; conduct supporting an inference that a particular right has been relinquished. The term waiver is used in many legal contexts. from the Securities and Exchange Commission that would allow for declaration and payment of the first quarter dividend from paid-in capital Paid-in capital Capital received from investors in exchange for stock, but not stock from capital generated from earnings or donated. This account includes capital stock and contributions of stockholders credited to accounts other than capital stock. . "I want to reassure re·as·sure tr.v. re·as·sured, re·as·sur·ing, re·as·sures 1. To restore confidence to. 2. To assure again. 3. To reinsure. our shareholders that it is our intent to pay the full 75 cent dividend this year." Xcel Energy's preliminary earnings for the first quarter of 2003 consisted of the following components: -- Utility earnings from continuing operations of $146 million, or $0.37 per share, compared with $136 million, or $0.38 cents per share, for the first quarter of 2002; -- Gain on sale of Viking Gas of $21 million (net of tax), or $0.05 per share, in 2003; -- NRG earnings of $40 million, or $0.10 per share (including discontinued operations, largely due to a $191-million gain, or about $0.48 per share, related to an asset disposal), compared with a net NRG loss of $20 million, or $0.06 per share in the first quarter of 2002; and -- Other subsidiary losses and holding company costs of $0.04 per share, compared with a loss of $0.03 per share for the first quarter of 2002. On Tuesday, April 29, Xcel Energy will host a conference call to review first quarter financial results and the financial outlook. The call will begin at 9:00 a.m. Central Time. To participate in the conference call, please dial in at least 5 to 10 minutes prior to the scheduled start and follow the operator's instructions. US Dial-In: 800-288-8961 International Dial-In: 651-291-0344 The conference call also will be simultaneously broadcast and archived on our Web site at www.xcelenergy.com. To access the presentation, click on Investor Information. If you are unable to participate in the live event, the call will be available for replay from 1:00 p.m. Central Time on April 29 through 11:59 p.m. Central Time on May 2. Replay Numbers -------------- US Dial-In: 800-475-6701 International Dial-In: 320-365-3844 Access Code: 681071 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 include statements that are intended to be identified in this document by the words "anticipate," "estimate," "expect," "projected," "forecast," "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 the availability of credit, actions of rating agencies and their impact on access to capital; 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; risks related to the financial condition of NRG; actions by the Minnesota 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. ; the failure to realize expectations regarding the NRG settlement agreement; actions by regulators, including the Securities and Exchange Commission (SEC) 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 (PUHCA PUHCA Public Utility Holding Company Act ) and the other risk factors listed from time to time by Xcel Energy in reports filed with the SEC, including Exhibit 99.01 to Xcel Energy's report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for year 2002. For more information, contact: R J Kolkmann, Managing Director, Investor Relations (612) 215-4559 P A Johnson, Director, Investor Relations (612) 215-4535 For news media inquiries only, please call Xcel Energy media relations (612) 215-5300 Xcel Energy Internet address: www.xcelenergy.com This information is not given in connection with any sale, offer for sale or offer to buy any security.
XCEL ENERGY INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Thousands of Dollars, Except Per Share Data)
Three months ended
March 31,
--------------------------
2003 2002
-------------- -----------
Operating revenues:
Electric utility......................... $1,427,309 $1,231,657
Gas utility.............................. 666,129 563,911
Electric and gas trading margin.......... 3,574 2,750
Nonregulated and other................... 645,605 555,786
Equity earnings from investments in
affiliates.............................. 38,847 16,480
-------------- -----------
Total operating revenues............... 2,781,464 2,370,584
Operating expenses:
Electric fuel and purchased power -
utility................................. 651,650 488,114
Cost of gas sold and transported -
utility................................. 479,951 375,615
Cost of sales - nonregulated and other... 360,062 277,063
Other operating and maintenance expenses
- utility............................... 381,627 391,491
Other operating and maintenance expenses
- nonregulated.......................... 197,460 194,322
Depreciation and amortization............ 258,809 247,993
Taxes (other than income taxes)......... 81,584 82,897
Special charges.......................... 25,716 14,113
-------------- -----------
Total operating expenses............... 2,436,859 2,071,608
-------------- -----------
Operating income............................ 344,605 298,976
Interest income and other nonoperating
income - net of other expenses............. 13,399 21,345
Interest charges and financing costs:
Interest charges - net of amounts
capitalized............................. 270,683 188,605
Distributions on redeemable preferred
securities of subsidiary trusts......... 9,586 9,700
-------------- -----------
Total interest charges and financing
costs................................. 280,269 198,305
-------------- -----------
Income from continuing operations before
income taxes and minority interests........ 77,735 122,016
Income taxes................................ 96,875 33,555
Minority interest........................... 194 (5,468)
-------------- -----------
Income (loss) from continuing operations.... (19,334) 93,929
Income from discontinued operations, net of
tax........................................ 212,181 9,575
-------------- -----------
Net income.................................. 192,847 103,504
Dividend requirements on preferred stock.... 1,060 1,060
-------------- -----------
Earnings available for common shareholders.. $191,787 $102,444
============== ===========
Weighted average common shares outstanding -
diluted (1000's)........................... 398,714 354,172
Earnings per share - diluted:
Income (loss) from continuing operations $(0.05) $0.26
Income from discontinued operations...... 0.53 0.03
-------------- -----------
Total.................................. $0.48 $0.29
============== ===========
Certain items in the Consolidated Statements of Operations have been
reclassified to conform to the presentation included in Xcel Energy's
Annual Report on Form 10-K for the year ended Dec. 31, 2002. These
reclassifications had no effect on net income or earnings per share.
XCEL ENERGY INC. Notes to Investor Relations Investor relations The process by which the corporation communicates with its investors. Release (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. Operating Results The following table summarizes the preliminary earnings-per-share contributions of Xcel Energy's businesses on both a Generally Accepted Accounting Principles (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) view and a pro-forma basis. Pro-forma adjustments are shown to present Xcel Energy results on a continuing operations basis without NRG and Viking Gas. Viking Gas was sold in January 2003, and we expect that the results of NRG's financial 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). will be the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of NRG. Consequently, Xcel Energy is presenting pro-forma earnings to reflect its results excluding businesses that are expected to be divested this year, consistent with earnings guidance (see Note 6). Earnings per share for the first quarter of 2003 are the same under both a basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. calculation, due to NRG's operating losses creating a loss from continuing operations for the quarter. The basic average share level (excluding common stock equivalents of approximately 24 million shares in 2003) is required to be used for both basic and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of calculations when this loss situation exists.
3 months ended
March 31
2003 2002
-------- --------
GAAP earnings (loss) per share-total................ $0.48 $0.29
Segments and components of GAAP earnings are:
Utility earnings - continuing operations..........
$0.37 $0.38
Utility earnings - discontinued operations (gain
on sale of Viking Gas)........................... 0.05 -
NRG earnings (loss) - continuing operations....... (0.38) (0.09)
NRG earnings (loss) - discontinued operations..... 0.48 0.03
Other nonregulated results/holding co. costs...... (0.04) (0.03)
-------- --------
Total GAAP earnings per share.................. $0.48 $0.29
======== ========
Reconciliation of GAAP results to Pro-forma Results:
GAAP earnings (loss) per share...................... $0.48 $0.29
Pro-forma adjustments for NRG and Viking Gas:
Remove NRG loss (earnings)......................... (0.10) 0.06
Remove Viking Gas gain on disposal................. (0.05) -
-------- --------
Pro-forma earnings per share from continuing
operations $0.33 $0.35
======== ========
Preliminary Status of Xcel Energy Results - Xcel Energy's first quarter 2003 results are preliminary at this time. NRG has previously filed a rate recovery request before the Federal Energy Regulatory Commission The Federal Energy Regulatory Commission (FERC) is the United States federal agency with jurisdiction over electricity sales, wholesale electric rates, hydroelectric licensing, natural gas pricing, and oil pipeline rates. (FERC FERC Federal Energy Regulatory Commission FERC FEMA Emergency Response Capability ) related to certain of its 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). generating facilities. On April 25, 2003, NRG was denied FERC approval for the requested rate increase. However, on April 28, 2003 the FERC instead issued approval for an alternative rate structure for NRG's Connecticut facilities. Until the impact of the rate structure change on future cash flows of each affected NRG facility can be estimated, it is not determinable Liable to come to an end upon the happening of a certain contingency. Susceptible of being determined, found out, definitely decided upon, or settled. determinable adj. if there are recoverability issues for a portion of the approximately $400 million of related plant assets for these facilities. If the rates approved by the FERC for NRG's Connecticut generating facilities are insufficient to provide future cost recovery, NRG's results may require adjustment for impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charges as of March 31, 2003. Consequently, Xcel Energy considers its NRG earnings impacts to be preliminary, and final first quarter 2003 results, including any adjustments resulting from the effects of the FERC decisions, will be reported in the 2003 Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the period ended March 31, 2003, to be filed with the SEC in May 2003. Common Stock Dilution Stock dilution is a general term that results from the issue of additional common shares by a company. This increase in common shares of a stock can result from a secondary market offering, employees exercising stock options, or by conversion of convertible bonds, preferred shares - Xcel Energy issued 23 million shares of common stock in a public offering in February 2002, as well as 25.8 million shares in June 2002 to complete the exchange offer for the publicly held shares of NRG. Dilution Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Notes: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. from these issuances reduced total earnings per share by 7 cents for the quarter ended March 31, 2003, including 5 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 utility earnings contribution. Estimated Impact of Temperature Changes on Regulated Earnings -The following summarizes the estimated impact of temperature variations on actual utility operating results relative to sales under normal weather conditions (excluding the impact on NRG and energy trading operations).
Earnings per Share Increase (Decrease)
---------------------------------------------
2003 vs. Normal 2002 vs. Normal 2003 vs. 2002
--------------- --------------- -------------
3 months ended March 31.. $0.00 ($0.01) $0.01
Sales Growth - The following table summarizes Xcel Energy's regulated utility growth for actual and weather-normalized energy sales for the three-month period ended March 31, 2003, compared with the same period in 2002.
3 months ended March 31
----------------------------
Actual Normalized
----------------------------
Electric residential 3.9% 2.7%
Electric commercial & industrial 2.7% 2.3%
Total retail electric sales 3.0% 2.3%
Firm gas sales (a) 2.0% 3.0%
Total gas sales (a) 3.8% 4.3%
(a) Excludes Viking Gas.
Electric Utility and Commodity Trading Margins - The following table details the changes in revenues, costs and margins (including the trading activity that is now required to be reported to be spoken of; to be mentioned, whether favorably or unfavorably. See also: Report net on the income statement) from Xcel Energy's electric utility and trading operations, excluding NRG:
Base Electric Gas
Electric Short-term Commodity Commodity
(Millions of Dollars) Utility Wholesale Trading Trading
----------------------------------------------------------------------
3 months ended 03/31/2003
Electric utility revenue..... $1,365 $62 $- $-
Electric fuel and purchased
power utility............... (611) (41) - -
Electric and gas trading
revenue - gross............. - - 58 383
Electric and gas trading
costs....................... - - (59) (378)
------------------------------- ---------
Gross margin before operating
expenses.................... $754 $21 $(1) $5
=========================================
Margin as a percentage of
revenue..................... 55.2% 33.9% (1.7%) 1.3%
3 months ended 03/31/2002
Electric utility revenue..... $1,191 $41 $- $-
Electric fuel and purchased
power-utility............... (452) (36) - -
Electric and gas trading
revenue - gross............. - - 317 455
Electric and gas trading
costs....................... - - (314) (455)
-----------------------------------------
Gross margin before operating
expenses.................... $739 $5 $3 $-
=========================================
Margin as a percentage of
revenue..................... 62.0% 12.2% 0.9% -
Inter-Company Consolidated
(Millions of Dollars) Eliminations Total
----------------------------------------------------------------------
3 months ended 03/31/2003
Electric utility revenue................. $- $1,427
Electric fuel and purchased power utility - (652)
Electric and gas trading revenue - gross (12) 429
Electric and gas trading costs........... 12 (425)
-----------------------------
Gross margin before operating expenses... $- $779
=============================
Margin as a percentage of revenue........ - 42.0%
3 months ended 03/31/2002
Electric utility revenue................. $- $1,232
Electric fuel and purchased power-utility - (488)
Electric and gas trading revenue - gross (17) 755
Electric and gas trading costs........... 17 (752)
-----------------------------
Gross margin before operating expenses... $- $747
=============================
Margin as a percentage of revenue........ - 37.6%
Table Note 1 - The wholesale and trading margins reflect the impact of
the regulatory sharing of certain margins under the energy cost
adjustment mechanisms in Colorado.
Base electric utility margins, primarily related to retail customers, increased approximately $15 million for the first quarter of 2003, compared with the first of quarter 2002. The higher base electric margin in the first quarter of 2003 reflects sales growth and the implementation of an air-quality improvement rider at Public Service Company of Colorado (PSCo) for the recovery of investments and related costs to improve air quality in Denver. Higher demand costs partially offset the increase in the quarter. Short-term wholesale margins consist of asset-based electric sales for resale resale n. selling again, particularly at retail. In many states a "resale license" or "resale number" is required so that the state can monitor the collection of sales tax on retail sales. RESALE. activity. Electric and gas commodity trading activity margins consist of non-asset-based trading activity. Short-term wholesale and electric and gas commodity trading sales margins increased approximately $17 million for first quarter 2003. The short-term wholesale increase reflects more favorable prices on sales to other utilities, primarily in Minnesota. Other Operating and Maintenance Expenses - Utility Utility operating and maintenance expenses for first quarter 2003 decreased approximately $10 million, or 2.5 percent, compared with the same period in 2002. The first quarter decrease was due to lower plant 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. and information technology costs, partially offset by higher benefit and storm related costs. Special Charges Special charges, included in Operating Expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , reduced earnings by the following:
(Dollars per share) 3 Months Ended
March 31,
---------------
2003 2002
------- -------
NRG special charges - financial restructuring and
other costs $(0.06) $-
Regulated Utility Special Charges:
Regulatory recovery adjustment (SPS) - (0.01)
Restaffing (utility and service companies) - (0.01)
------- -------
Total regulated utility special charges - (0.02)
------- -------
Earnings reduction from special charges $(0.06) $(0.02)
===============
2002 Regulatory Recovery Adjustment - During the first quarter of 2002, Southwestern Public Service (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 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, wrote off $5 million, or 1 cent per share, of restructuring costs relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc costs incurred to comply with legislation requiring a transition to retail competition in Texas. 2002 Restaffing - In the first quarter of 2002, Xcel Energy incurred pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern special charges of $9 million, or approximately 1 cent per share, for staff consolidation charges. See discussion of nonregulated and holding company special charges in Note 2. Sale of Viking Gas In January 2003, Xcel Energy sold Viking Gas for 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 $124 million, resulting in a pre-tax gain of $36 million. This gain, which increased earnings for the first quarter of 2003 by approximately $0.05 cents per share, has been reported in discontinued operations. Other operating results of Viking Gas for the first quarter of 2003 and 2002 have not been reclassified to discontinued operations 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. . Note 2. Nonregulated and Holding Company Operating Results The following table summarizes the preliminary earnings-per-share contributions of Xcel Energy's nonregulated businesses and holding company. As previously indicated, results are preliminary and subject to change.
3 months ended
March 31,
-----------------
2003 2002
-------- --------
NRG Energy, Inc. results:
NRG loss from continuing operations................ (0.38) (0.09)
Discontinued operations - gain on disposal of
Killingholme...................................... 0.48 -
Discontinued operations - other.................... 0.00 0.03
-------- --------
Subtotal - NRG earnings (loss).................. 0.10 (0.06)
Other Nonregulated & Holding Co. results:
Xcel International................................. 0.00 0.00
Eloigne Company.................................... 0.00 0.01
Seren Innovations Inc.............................. (0.01) (0.02)
e prime............................................ 0.00 0.00
Planergy International............................. 0.00 (0.01)
Financing costs & preferred dividends.............. (0.03) (0.02)
Other.............................................. 0.00 0.01
-------- --------
Subtotal - Nonregulated results other than NRG &
Holding Co. costs............................... (0.04) (0.03)
-------- --------
Total nonregulated/holding co. EPS................... $0.06 $(0.09)
======== ========
NRG Continuing Operations - During the first quarter, NRG's losses from continuing operations increased in 2003 compared to 2002 largely due to higher interest expense, lower income tax benefits available and special charges (discussed below). Increased interest costs reflect higher NRG corporate debt levels in 2003. Also, as a result of not being included in Xcel Energy's consolidated tax filing, NRG no longer receives a tax benefit for losses incurred during 2003. These higher losses were partially offset by increased gross margins within NRG's central U.S., western U.S. and international regional operations as compared to the prior year. In addition, general and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. decreased due to overall cost containment cost containment, n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. efforts. NRG expensed approximately $24 million in the first quarter of 2003 for special charges related mainly to its financial restructuring. These costs, which increased the 2003 loss from continuing operations by 6 cents per share, include expenses for financial and legal advisors, contract termination Defense procurement: the cessation or cancellation, in whole or in part, of work under a prime contract or a subcontract thereunder for the convenience of, or at the option of, the government, or due to failure of the contractor to perform in accordance with the terms of the contract (default). costs, employee separation and other restructuring activities. NRG Discontinued Operations - Since the summer of 2002, NRG has placed several of its consolidated projects for sale and has completed the majority of these sales through March 31, 2003. All results of these projects, including gains or losses on disposal, are reflected as discontinued operations. Results for 2002 have been reclassified from amounts previously reported for consistency with the 2003 presentation. Discontinued operations in 2003 includes a gain of $191 million, or $0.48 per share, related to the sale of NRG's Killingholme project in January 2003. NRG had previously recognized a $478-million asset impairment 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. for Killingholme in 2002, and the gain represents a final adjustment to reflect the impacts of transferring the project to lenders in 2003. Seren Seren Chlordiazepoxide, see there - Seren operates a combination cable television, telephone and high-speed Internet See broadband. access system in St. Cloud, Minn., and Contra Costa County, California Contra Costa County is a suburban county in the San Francisco Bay Area of the U.S. state of California. As of the 2000 census, it had a population of 948,816. The county seat is Martinez. . At March 31, 2003, Xcel Energy's investment in Seren was approximately $264 million. 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 and holding company 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. Note 3. Xcel Energy Liquidity Credit Facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities - As of April 23, 2003, Xcel Energy had the following credit facilities available to meet its liquidity needs:
Company Facility Drawn Available Cash Liquidity Maturity
------- -------- ----- --------- ----- --------- ---------
(Millions of
dollars)
------------
NSP-Minnesota $300 $0 $300 $94 $394 Aug-2003
----------------------------------------------------------------------
NSP-Wisconsin $0 $0 $0 $29 $29
----------------------------------------------------------------------
PSCo $530 $50 $480 $41 $521 June-2003
----------------------------------------------------------------------
SPS $100 $3 $97 $99 $196 Feb-2004
----------------------------------------------------------------------
Xcel Energy -
Holding Company $400 $400 $0 $254 $254 Nov-2005
----------------------------------------------------------------------
The liquidity table reflects the following activity: -- In March 2003, NSP-Minnesota retired $100 million of 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. debt. -- In April 2003, NSP-Minnesota retired $80 million of long-term debt. -- In March 2003, PSCo issued 10-year, $250 million of long-term debt with a coupon of 4.875 percent. -- In April 2003, PSCo retired $250 million of long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. . -- In April 2003, Xcel Energy terminated a $100 million term loan facility. Xcel Energy expects to accumulate Accumulate Broker/analyst recommendation that could mean slightly different things depending on the broker/analyst. In general, it means to increase the number of shares of a particular security over the near term, but not to liquidate other parts of the portfolio to buy a security additional cash at the holding company level during 2003 from the tax benefit associated with its investment in NRG and from the receipt of operating company operating company A business that engages in transactions with outsiders. dividends (see Note 4). Financing Plans - The following details Xcel Energy's financing plan for debt issuances during 2003, subject to favorable market conditions: -- Xcel Energy is in the process of renewing the credit facilities for PSCo and NSP-Minnesota and expects to complete this process in May 2003. Based on reduced liquidity needs, the current plan is to downsize Downsize Reducing the size of a company by eliminating workers and/or divisions within the company. Notes: When a company downsizes, it is attempting to find ways to improve efficiency and increase profitability. It is sometimes referred to as trimming the fat. the PSCo facility to $300 million and the NSP-Minnesota facility to $225 million. Potentially, both facilities may be increased by $50 million at the option of PSCo or NSP-Minnesota, respectively. -- PSCo expects to issue up to $400 million of debt for working capital, repayment of short-term borrowings and possible refinancing Refinancing An extension and/or increase in amount of existing debt. of existing long-term with lower coupon debt. -- NSP-Minnesota expects to issue up to $150 million of debt to partially replace debt maturing in 2003. -- NSP-Wisconsin expects to issue up to $150 million of debt to partially replace debt maturing in 2003 and for possible refinancing of existing long-term with lower coupon debt. -- Xcel Energy will also evaluate additional opportunities during 2003 to refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. existing debt securities with lower coupon debt. Dividend Restrictions - Under the PUHCA, unless there is an order from the SEC, a holding company or any subsidiary may only declare and pay dividends out of retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. . Xcel Energy preliminary retained earnings were $91 million at March 31, 2003, pending subsequent event resolution at NRG, as discussed in Note 1. Late adjustments to the preliminary NRG results could reduce retained earnings to a deficit as of March 31, 2003. Xcel Energy has requested authorization The right or permission to use a system resource; the process of granting access. See access control. from the SEC to pay dividends out of paid-in capital up to $260 million until Sept. 30, 2003. The SEC has not acted on the request as of the time of this release. Xcel Energy intends to make every effort to pay the full dividend of 75 cents per share during 2003. If the SEC does not grant authorization to pay the dividend out of capital surplus, Xcel Energy currently expects that its retained earnings would be sufficiently positive before the end of 2003 to pay dividends at that time. Note 4. NRG Restructuring and Developments Income Tax Benefit on Xcel Energy's Investment in NRG Based on the foreseeable fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. effects of a settlement agreement with the major NRG creditors, including an expected write-off of Xcel Energy's investment in NRG, Xcel Energy recognized the expected tax benefits of the write-off as of Dec. 31, 2002. The tax benefit has been estimated at approximately $706 million. This benefit is based on the tax basis of Xcel Energy's investment in NRG. Xcel Energy expects to claim a worthless stock deduction deduction, in logic, form of inference such that the conclusion must be true if the premises are true. For example, if we know that all men have two legs and that John is a man, it is then logical to deduce that John has two legs. in 2003 on its investment in NRG. This would result in Xcel Energy having a net operating loss for tax purposes for the year. Under current law, this 2003 net operating loss could be carried back two years for federal tax purposes. Xcel Energy expects to file for a tax refund Tax refund Money back from the government when too much tax has been paid or withheld from a salary. of approximately $355 million in first quarter 2004. This refund TO REFUND. To pay back by the party who has received it, to the party who has paid it, money which ought not to have been paid. 2. On a deficiency of assets, executors and administrators cum testamento annexo, are entitled to have refunded to them legacies is based on a two-year carry-back against previously reported taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. in 2002 and 2001. As to the remaining $351 million of expected tax benefits, Xcel Energy expects to eliminate or reduce estimated quarterly income tax payments, beginning in 2003. The amount of cash saved by the reduction in estimated tax Federal and state tax laws require a quarterly payment of estimated taxes due from corporations, trusts, estates, non-wage employees, and wage employees with income not subject to withholding. payments would depend on Xcel Energy's taxable income. NRG Involuntary Bankruptcy involuntary bankruptcy Bankruptcy that is forced by creditors instead of being initiated by the firm or individual. Compare voluntary bankruptcy. See also Chapter 7, Chapter 11. Filing On Nov. 22, 2002, five former NRG executives (the petitioners) filed an involuntary involuntary adj. or adv. without intent, will, or choice. Participation in a crime is involuntary if forced by immediate threat to life or health of oneself or one's loved ones, and will result in dismissal or acquittal. INVOLUNTARY. Chapter 11 petition against NRG in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Bankruptcy Court for the District of Minnesota. Under provisions of federal law, NRG has the full authority to continue to operate its business as if the involuntary petition had not been filed unless and until a court hearing on the validity of the involuntary petition is resolved adversely to NRG. NRG responded to the involuntary petition, contesting the petitioners' claims and filing a motion to dismiss the case. In their petition, the petitioners sought recovery of 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 other benefits of approximately $28 million. NRG and the petitioners reached an agreement and compromise regarding their respective claims against each other. In February 2003, this settlement agreement was executed, pursuant to which NRG agreed to pay the petitioners an aggregate settlement in the amount of $12 million. On Feb. 28, 2003, Stone & Webster Webster, town (1990 pop. 16,196), Worcester co., S Mass., near the Conn. line; settled c.1713, set off from Dudley and Oxford and inc. 1832. The chief manufactures are footwear, fabrics, and textiles. , Inc. and Shaw Constructors, Inc. filed a petition alleging that they hold 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. , non-contingent claims against NRG in a joint amount of $100 million. The Minnesota Bankruptcy Court has discretion in reviewing and ruling on the motion to dismiss, and in reviewing and approving the above- referenced settlement agreement. There is a risk that the Minnesota Bankruptcy Court may, among other things, reject the settlement agreement or enter an order for relief under Chapter 11 of Title 11 of the Bankruptcy Code Bankruptcy Code may refer to:
A hearing was held on April 10, 2003, to consider the motion to dismiss. No decision was reached at this hearing. On April 21, 2003, Fortistar Capital, Inc. and Fortistar Methane methane (mĕth`ān), CH4, colorless, odorless, gaseous saturated hydrocarbon; the simplest alkane. It is less dense than air, melts at −184°C;, and boils at −161.4°C;. , LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control filed a joinder The union in one lawsuit of multiple parties who have the same rights or against whom rights are claimed as coplaintiffs or codefendants. The combination in one lawsuit of two or more causes of action, or grounds for relief. petition to the NRG involuntary bankruptcy proceeding, alleging a claim of $39.6 million. The 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 judge is expected to rule on this involuntary bankruptcy proceeding shortly. Tentative tentative, adj not final or definite, such as an experimental or clinical finding that has not been validated. Settlement with NRG Creditors On March 26, 2003, Xcel Energy announced that it reached a tentative settlement with holders of most of NRG Energy's long-term notes and the steering committee steer·ing committee n. A committee that sets agendas and schedules of business, as for a legislative body or other assemblage. steering committee Noun representing NRG's bank lenders. The settlement is subject to certain conditions, including the approval of at least a majority in dollar amount of the NRG bank lenders and long-term note holders and definitive documentation. Xcel Energy is in the process of finalizing the documentation of the settlement. The terms of the settlement call for Xcel Energy to make payments over the next 13 months totaling up to $752 million for the benefit of NRG's creditors in partial consideration for their waiver of any existing and potential claims against Xcel Energy. Under the settlement, Xcel Energy will make the following payments: -- $350 million at or shortly following the 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 a restructuring of NRG's debt. It is expected this payment would be made prior to year-end 2003; -- $50 million on Jan. 1, 2004; and -- $352 million in April 2004, at which time Xcel Energy anticipates receiving a tax refund based on the loss of its investment in NRG. Note 5. Regulatory Matters PSCo General Rate Case - In May 2002, PSCo filed a combined general retail electric, gas and thermal energy thermal energy Internal energy of a system in thermodynamic equilibrium (see thermodynamics) by virtue of its temperature. A hot body has more thermal energy than a similar cold body, but a large tub of cold water may have more thermal energy than a cup of boiling base rate case with the Colorado Public Utilities Commission
CPUC Current Procurement Unit Cost ) to address increased costs for providing energy to Colorado customers. On April 4, 2003, a comprehensive settlement agreement between PSCo and all but one of the intervenors was executed and filed with the CPUC, which addressed all significant issues in the rate case. In summary, the settlement agreement, among other things, provides for: -- an 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: return on equity of 10.75 percent for electricity and 11.0 percent for natural gas and thermal energy; -- base rate decreases of approximately $33 million for natural gas and $230,000 for electricity, including an annual reduction to electric depreciation expense of approximately $20 million, effective July 1, 2003; -- an interim adjustment clause (IAC (1) (InterApplication Communications) The interprocess communications capability in the Macintosh starting with System 7.0. Many IAC events take place behind the scenes. ) that recovers 100 percent of prudently incurred fuel and purchased energy expense above the expense recovered through electric base rates. This clause is projected to recover energy costs totaling approximately $216 million in 2003. The IAC originally went into effect on Jan. 1, 2003. However, the IAC rate will be increased by no later than July 1, 2003, by an additional $93 million to recover the total anticipated increase in costs for 2003; -- a new electric commodity adjustment clause (ECA ECA See: Export Credit Agency ) for 2004-2006, with an $11.25-million cap on any cost sharing over or under an allowed ECA formula rate. Hearings are scheduled for late April 2003. Management believes the CPUC will approve the settlement agreement at that time and issue a final rate order during the second quarter, with new rates effective as discussed above. Note 6. Xcel Energy Earnings Guidance Xcel Energy's 2003 earnings per share (EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ) guidance and key assumptions are detailed in the following table. The guidance also includes a pro-forma forecast of earnings from continuing operations for 2003 that does not include NRG impacts or the gain on the sale of Viking Gas.
2003 EPS Range
-----------------
Utility operations $1.25 - $1.30
Seren Innovations ($0.05)
Eloigne Company $0.03
Holding company financing ($0.09)
Other nonregulated subsidiaries $0.01
-----------------
Xcel Energy - Pro-Forma Continuing Operations $1.15 - $1.20
Xcel Energy's share of NRG's losses ($0.50) - ($0.30)
Tax effect of settlement payments $0.65
Gain on the sale of Viking Gas $0.05
-----------------
Xcel Energy - GAAP $1.35 - $1.60
Key Assumptions: -- The deconsolidation of NRG during 2003, with Xcel Energy recording NRG losses until the negative investment in NRG reaches the maximum amount of financial commitments Xcel Energy has for NRG, and divestiture of NRG occurs by year-end; -- The NRG settlement payments are tax deductible That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). ; -- Average common stock and equivalents of approximately 425 million shares in 2003, including the dilutive effects Dilutive effect Result of a transaction that decreases earnings per common share (EPS). of common stock equivalents for the convertible notes issued in 2002, based on the "If Converted" method; and -- No common equity issuance In financial markets, an Equity Issuance is the sale of new equity or "stocks" by a firm to investors. Equity Issuance can involve a private sale, in which the transaction between investors and the firm takes place directly, or publicly, in which case the firm has to during 2003, with the exception of the potential issuance of shares through the dividend reinvestment plan reinvestment plan See dividend reinvestment plan (DRIP). , the direct purchase plan or conversion by convertible bondholders. Xcel Energy expects its cash from operations to be approximately $1.3 billion and projects capital expenditures to be approximately $900 million in 2003. These cash flows assume NRG is deconsolidated and its cash flows are therefore excluded. In addition, these cash flows do not include the impact from the tax benefits associated with the write off of Xcel Energy's investment in NRG or the payments associated with the settlement with NRG creditors.
XCEL ENERGY INC.
UNAUDITED EARNINGS RELEASE SUMMARY
All dollars in thousands, except earnings per share
3 months ended March 31, 2003 2002
----------------------------------------------------------------------
Operating revenues:
Electric and gas utility revenue, and
trading margins $2,097, 012 $1,798,318
NRG revenue and equity income 582,040 482,769
Other nonregulated and equity income 102,412 89,497
------------------------
Total revenue $2,781,464 $2,370,584
Income (loss) from continuing operations $(19,334) $93,929
Income from discontinued operations 212,181 9,575
------------------------
Net income $192,847 $103,504
Earnings available for common shareholders $191,787 $102,444
Average shares - common and potentially
dilutive (1000's) 398,714 354,172
Segments and Components of Earnings per share
- diluted
----------------------------------------------
Utility earnings - continuing operations $0.37 $0.38
NRG continuing operations, including
restructuring costs (0.38) (0.09)
Other nonregulated subsidiaries & holding co.
costs (0.04) (0.03)
Discontinued operations 0.53 0.03
------------------------
Total earnings (loss) per share - GAAP $0.48 $0.29
========================
12 months ended March 31, 2003 2002
----------------------------------------------------------------------
Operating revenue:
Electric and gas utility revenue, and
trading margins $7,140,356 $7,777,751
NRG revenue and equity income 2,380,420 2,390,200
Other nonregulated and equity income 414,476 361,989
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Total revenue $9,935,252 $10,529,940
Income (loss) from continuing operations $(1,774,633) $639,642
Income (loss) from discontinued operations (354,015) 39,231
Extraordinary item - 10,287
------------------------
Net income (loss) $(2,128,648) $689,160
Earnings (loss) available for common
shareholders $(2,132,889) $684,919
Average shares - common and potentially
dilutive (1000's) 393,119 346,856
Segments and Components of Earnings per share
- diluted
---------------------------------------------
Utility earnings - continuing operations $1.57 $1.72
NRG continuing operations, including asset
impairments, disposal gains and losses, and
restructuring costs (7.73) 0.27
Tax benefit related to investment in NRG -
see Note 4 1.80 -
Other nonregulated subsidiaries & holding co.
costs (0.17) (0.16)
Discontinued operations (0.90) 0.11
Extraordinary item - 0.03
-------------------------
Total earnings (loss) per share - GAAP $(5.43) $1.97
=========================
Book value per share $12.08 $18.10
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