United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark one)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For Quarter Ended JUNE 30, 1995 Commission File Number 10-3140
NORTHERN STATES POWER COMPANY, A WISCONSIN CORPORATION, MEETS THE CONDITIONS
SET FORTH IN GENERAL INSTRUCTION H (1) AND (2) OF FORM 10-Q AND IS THEREFORE
FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT.
Northern States Power Company
(Exact name of registrant as specified in its charter)
Wisconsin 39-0508315
(State or other jurisdiction of (I.R.S.Employer Identification No.)
incorporation or organization)
100 North Barstow Street, Eau Claire, Wisconsin 54702
(Address of principal executive officers) (Zip Code)
Registrant's telephone number, including area code (715) 839-2621
NONE
Former name, former address and former fiscal year, if changed since last
report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at June 30, 1995
Common Stock, $100 par value 862,000 Shares
All outstanding common stock is owned beneficially and of record by Northern
States Power Company, a Minnesota corporation.
NORTHERN STATES POWER COMPANY (WISCONSIN)
BALANCE SHEETS
June 30 December 31
1995 (*) 1994
(Thousands of dollars)
ASSETS
UTILITY PLANT
Electric 846685 836665
Gas 89329 88350
Electric 57810 54675
Total 993824 979690
Accumulated provision for depreciation -358192 -344675
Net utility plant 635632 635015
OTHER PROPERTY AND INVESTMENTS 8024 6691
CURRENT ASSETS
Cash and cash equivalents 142 61
Accounts receivable - net 33168 36946
Materials and supplies - at average cost
Fuel 2817 3413
Other 9835 12280
Accrued utility revenues 12103 16409
Prepayments and other 10350 11030
Total current assets 68415 80139
DEFERRED DEBITS
Unamortized debt expense 2847 2928
Regulatory assets 32751 32783
Federal Income tax receivable 3307 3307
Insurance receivable 1476 3091
Other 2409 2932
Total deferred debits 42790 45041
TOTAL 754861 766886
LIABILITIES
CAPITALIZATION
Common Stock - authorized
" 870,000 shares of $100 par value,"
" issued shares: 1995 and 1994, 862,000" 86200 86200
Premium on common stock 10461 10461
Retained Earnings 220048 218833
Total common stock equity 316709 315494
LONG-TERM DEBT 213235 213700
Total capitalization 529944 529194
CURRENT LIABILITIES
Notes payable - parent company 26300 41300
Long-term debt due within one year 0 2910
Accounts payable 10316 14415
" Salaries, wages, and vacation pay accrued" 5048 6028
Payable to affiliate companies (principally parent) 16468 8982
Federal taxes accrued 1304 0
Other taxes accrued 1197 936
Interest accrued 5092 5485
Other 3166 1463
Deferred tax liability 1452 1953
Total current liabilities 70343 83472
DEFERRED CREDITS
Accumulated deferred income taxes 99118 96380
Accum. deferred investment tax credits 21887 22332
Regulatory liability 16983 17961
Customer advances 6372 5543
Other 10214 12004
Total deferred credits 154574 154220
TOTAL 754861 766886
(*) Unaudited
The Notes to Financial Statements are an integral part of the
Balance Sheet.
3
NORTHERN STATES POWER COMPANY (WISCONSIN)
INCOME STATEMENTS
Three Months Ended Six Months Ended
June 30 June 30
(Thousands of dollars) (Thousands of dollars)
1995(*) 1994(*) 1995(*) 1994(*)
Operating revenues
Electric 90009 88520 186364 189068
Gas 12237 11585 43795 45041
Total 102246 100105 230159 234109
Operating expenses
Fuel for electric generation 631 1053 1789 2799
Purchased and interchange power 45219 43883 88803 87345
Gas purchased for resale 9186 10168 27207 30080
Administrative and general 5857 7245 12428 14263
Other operation 12755 12372 25974 25164
Maintenance 5392 5626 9285 9770
Depreciation and amortization 8181 7568 16296 15092
Taxes: Property and general 3479 3436 7000 6950
Current income tax expense 2595 375 12106 11145
Net Provision for Deferred Income Taxes -55 1341 922 2432
Net Investment tax credit adjustments -234 -236 -468 -472
Total 93006 92831 201342 204568
Operating income 9240 7274 28817 29541
Other income
Other income and deductions - net 184 140 412 194
Allowance for funds used during
construction-Equity 64 194 122 346
Total Other income 248 334 534 540
Income before interest charges 9488 7608 29351 30081
Interest charges
Interest on long-term debt 4027 3963 8038 7937
Other interest and amortization 1238 326 2076 614
Allowance for funds used during
construction - Debt -38 -122 -184 -218
Total 5227 4167 9930 8333
Net Income 4261 3441 19421 21748
STATEMENTS OF RETAINED EARNINGS
Balance at beginning of period 227390 217214 218833 205114
Net income for period 4261 3441 19421 21748
Net Additions 4261 3441 19421 21748
Dividends paid 11603 6206 18206 12413
Balance at end of period 220048 214449 220048 214449
(*) Unaudited
The Notes to Financial Statements are an integral part of the Statements of
Income and Retained Earnings
2
Northern States Power Company (Wisconsin)
Statements of Cash Flows
Six Months Ended
June 30
(Thousands of dollars)
1995(*) 1994(*)
Cash Flows from Operating Activities:
Net Income "$19,420 " "$21,748 "
Adjustments to reconcile net income to cash from operating activities:
Depreciation and amortization "16,960 " "15,935 "
Deferred income taxes "1,841 " "5,779 "
Investment tax credit adjustments (446) (740)
Insurance receivable "1,615 "
Allowance for funds used during construction - equity (122) (346)
Cash provided from (used by) changes in working capital "17,956 " "6,837 "
Cash provided from (used by) changes in other assets and liabilities (829)
"(3,633)"
Net cash provided from operating activities "56,395 " "45,580 "
Cash Flows from Financing Activities:
Issuance of long-term debt 0 0
Issuance (repayment) of short-term debt "(15,000)" "(12,800)"
Redemption of long-term debt(Including Reacquisition Premium) "(3,375)"
(500)
Dividends paid "(18,206)" "(12,413)"
Net cash used for financing activities "(36,581)" "(25,713)"
Cash Flows from Investing Activities:
Capital expenditures "(17,566)" "(21,875)"
Increase (decrease) in construction related accounts payable (473) 924
Allowance for funds used during construction - equity 122 346
Other "(1,816)" 598
Net cash used for investing activities "(19,733)" "(20,007)"
Net increase (decrease) in cash and cash equivalents 81 (140)
Cash and cash equivalents beginning of period 61 449
Cash and cash equivalents end of period $142 $309
The Notes to Financial Statements are an integral part of the Statement of Cash
Flows
4
Northern States Power Company (Wisconsin)
NOTES TO FINANCIAL STATEMENTS
In the opinion of management, the accompanying unaudited financial statements
contain all adjustments necessary to present fairly the Northern States Power
Company Wisconsin's (The Company's) financial position as of June 30, 1995, and
December 31, 1994 and the results of its operations and cash flows for the six
months ended June 30, 1995 and 1994.
The accounting policies followed by the Company are set forth in Note 1 to the
Company's financial statements in its Annual Report on Form 10-K for the
year ended December 31, 1994, (The Form 10-K). The following notes should
be read in conjunction with such policies and other disclosures in the Form
10-K.
1. Proposed Business Combination
The Company is a wholly owned subsidiary of Northern States Power Company, a
Minnesota corporation (NSPM). On April 28, 1995, NSPM and Wisconsin Energy
Corporation (WEC) entered into an Agreement and Plan of Merger (Agreement).
As a result, a registered utility holding company, which will be known as
Primergy Corporation (Primergy), will be the parent of NSPM and the current
operating subsidiaries of NSPM and WEC. Each outstanding share of common
stock of NSPM will be converted into 1.626 shares of common stock of Primergy
and each outstanding share of common stock of WEC will remain outstanding as
one share of common stock of Primergy. The business combination is intended
to be tax-free for income tax purposes, and to be accounted for as a
"pooling of interests". The Agreement is subject to various conditions,
including approval of the stockholders of NSPM and WEC, and the approval of
various regulatory agencies. The Company anticipates that the completion of
the regulatory review and approval process will take approximately 12-18
months and, accordingly, the completion of this business combination is
not anticipated until late 1996. Item 5 of Part II of this report provides
additional information regarding the proposed transaction.
2. Rate Matters
There were no changes in any of the Company's jurisdictions' rates since the
Form 10-K was filed.
The Company filed a rate case with the Public Service Commission of
Wisconsin on June 1, 1995, for a 3.6 percent increase in Wisconsin's gas
retail rates that is proposed to be effective on January 1, 1996. No
electric change has been proposed.
Item 2. Management's Discussion and Analysis of Results of Operations
Discussion of financial condition and liquidity is omitted per conditions set
forth in general instructions H (1) and (2) of Form 10-Q for wholly-owned
subsidiaries. (Reduced disclosure format.)
On April 28, 1995, NSPM and WEC entered into an Agreement and Plan of Merger
which provides for a strategic business combination involving the two
companies in a "merger-of-equals" transaction. See Part II of this report.
The Company's net income for the second quarter and six months ended June 30,
1995 was $4.3 million and $19.4 million respectively. Net income increased
$0.8 million for the second quarter and decreased $2.3 million for the six
months ended June 30 from the comparable periods a year ago. The increase
in net income for the second quarter was primarily related to increased
sales which were weather related. The decrease in net income relative to
1994 for the six month period is due to a significantly warmer January and
February.
ELECTRIC SALES AND REVENUES
Electric revenues for the second quarter of 1995 increased $1.5 million
(1.7 percent) from the electric revenues for the second quarter of 1994.
Electric sales increased 3.6 percent in the second quarter of 1995 as
compared with the second quarter of 1994 mainly due to weather. The sales
increase was offset by a $0.5 million decrease in revenue, as the result of
reduced charges to our parent company Northern States Power Company, a
Minnesota Corporation, through a cost sharing arrangement (Interchange
Agreement) in which electric generation and transmission costs are combined
and shared.
Electric revenues for the six months ended June 30, 1995 decreased
$2.7 million (1.4 percent) from six months ended June 30, 1994. This
decrease is primarily the result of a $2.5 million decrease in Interchange
Agreement billings to the Minnesota Company due to lower transmission and
generation costs in Wisconsin. Electric sales are 0.8% higher than the
same period in 1994.
GAS SALES AND REVENUES
Gas revenues increased $0.7 million (5.6 percent) in the second quarter of
1995 compared to the second quarter 1994. This is the result of a
13.5 percent increase in gas sales, due to a combination of both normal
growth and comparably cooler temperatures in 1995. Another factor with
regard to the revenue is the lower spot market gas costs which reduced
purchased gas adjustment revenue by approximately $1.4 million.
Revenues from gas sales decreased $1.2 million (2.8 percent) in the first
six months of 1995 compared to the same period in 1994. The primary reason
for this is the lower commodity cost. Spot market gas costs resulted in
approximately $3.1 million of purchased gas adjustment clause revenue
decrease.
OPERATING EXPENSES
Operating expenses increased $0.2 million in the second quarter of 1995 as
compared to the second quarter of 1994. Although electric sales increased,
fuel for generation decreased by $0.4 million, because lower cost fuels were
used. Purchased and interchange power expenses increased by $1.3 million
due to higher electric sales. Gas purchased for resale decreased $1.4
million because of the lower market price. The Company's administrative and
general expenses were down $1.4 million, as a result of reduced contingent
liabilities associated with litigation and lower regulatory expenses.
Depreciation on plant increases adds $0.6 million in operating expense over
the second quarter of 1994. The second quarter's deferred tax expenses have
decreased from the 1994 level largely as a result of an interest write-off
in 1995 that had been deferred. Current income tax expense increased largely
due to income before taxes increasing.
Operating expenses decreased $3.2 million for the six months ended
June 30, 1995 in relation to the same period for 1994. Fuel expense
associated with electrical generation is lower because of reduced generation
i Wisconsin and lower cost fuels were used. Purchased and interchange power
expenses are higher due to the increased generation and purchases necessary
to meet the increase in electric sales. Gas purchased for resale is
$2.9 million less during this period due to decreased commodity cost on the
spot market.
OTHER INCOME
There were no material changes to other income and deductions in the first two
quarters of 1995 as compared with the first two quarters of 1994.
INTEREST CHARGES
The write-off of prior years' interest on income tax assessment during 1995
has increased interest expense by $0.6 million. Additional increases of $0.6
are a result of increases in both the interest rate and the level of
short-term debt between 1995 and 1994.
PART II. OTHER INFORMATION
Item 5. Other Information
Proposed Business Combination
On April 28, 1995, NSP and Wisconsin Energy Corporation (WEC) entered into an
Agreement and Plan of Merger, which provides for a strategic business
combination involving NSP and WEC in a "merger-of-equals" transaction. On
July 11, 1995, NSP and WEC filed an application and supporting testimony with
the Federal Energy Regulatory Commission seeking approval of the proposed
merger to form Primergy Corporation. The filing consisted of the merger
application, a proposed joint transmission tariff, and an amendment to the
NSP Interchange Agreement. Similar filings will be made later this year with
regulatory agencies in various states, including Minnesota, Wisconsin,
Michigan and North Dakota. Preliminary joint proxy materials requesting
shareholder approval of the merger have been submitted to the Securities and
Exchange Commission. When finalized, such joint proxies will be mailed to
shareholders of NSP and WEC for their considertaion at meetings scheduled for
September 13, 1995. The costs incurred associated with the proposed merger
are being deferred as a component of Regulatory Assets based on NSP's current
plan to request amortization and rate recovery over future periods. At
June 30, 1995, $5.5 million of costs associated with the proposed merger had
been deferred by Northern States Power Company (a Minnesota Corporation).
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The following Exhibit is filed with this report:
27.01 Financial Data Schedule for the three months and six months
ended June 30, 1995.
The following Exhibits are incorporated herein by reference:
None
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NORTHERN STATES POWER COMPANY
(Registrant)
Date: August 15, 1995 /s/
Kenneth J Zagzebski
Controller
(Principal Accounting Officer)
Date: August 15, 1995 /s/
Neal Siikarla
Treasurer
(Principal Financial Officer)