EXHIBIT 99
UNAUDITED PROFORMA COMBINED CONDENSED FINANCIAL INFORMATION
The following unaudited pro forma combined condensed balance sheet at
December 31, 1999 gives effect to the NCE/NSP Merger as if it had occurred at
December 31, 1999. The unaudited pro forma combined condensed statements of
income for each of the three years in the period ended December 31, 1999 give
effect to the NCE/NSP Merger as if it had occurred on January 1, 1997. These
statements are prepared on the basis of accounting as required under a pooling
of interests and do not reflect any cost savings anticipated by management as a
result of the NCE/NSP Merger. Accordingly, the pro forma information is not
necessarily indicative of the financial position or results of operations that
would have occurred had the NCE/NSP Merger been consummated for the periods for
which it is given effect, nor is it necessarily indicative of future operating
results or financial condition.
147
Unaudited Pro Forma Combined Condensed Statement of Income
Reflecting Completion of the NCE/NSP Merger
Year ended December 31, 1999
(Thousands of Dollars, Except per Share Data)
Northern New Century Reporting
States Power Energies Adjustments Pro Forma Pro Forma
(as Reported) (as Reported) (Note 2) Adjustments Combined
------------- ------------- ----------- ----------- ----------
Operating revenues:
Electric....................................... $ 2,397,096 $ 2,527,341 $ (74) $ $4,924,363
Gas............................................ 471,915 764,943 (95,429) 1,141,429
Nonregulated and other revenues................ - 83,146 608,342 691,488
Earnings from equity investments............... - - 112,124 112,124
------------- ------------- ----------- ----------- ----------
Total operating revenues.................... 2,869,011 3,375,430 624,963 6,869,404
Operating expenses:
Electric fuel and purchased power.............. 773,680 1,185,232 - 1,958,912
Cost of gas sold and transported............... 278,240 485,107 (79,892) 683,455
Other operation and maintenance................ 768,169 538,967 90,989 1,398,125
Depreciation and amortization.................. 355,704 280,913 (9,063) 627,554
Taxes other than income taxes.................. 222,446 137,259 (2,034) 357,671
Income taxes - utility......................... 127,293 - (127,293) -
Nonregulated operating expenses................ - 106,264 514,866 621,130
------------- ------------- ----------- ----------- ----------
Total operating expenses.................... 2,525,532 2,733,742 387,573 5,646,847
Operating income................................ 343,479 641,688 237,390 1,222,557
Other income (expense):
Income from nonregulated businesses before
interest and taxes............................ 65,376 - (65,376) -
Equity earnings from unconsolidated
subsidiaries.................................. - 44,265 (44,265) -
Other income (deductions) - net................ (9,320) (9,098) (456) (18,874)
Income taxes on nonregulated and nonoperating
items - benefit............................... 61,010 - (61,010) -
------------- ------------- ----------- ----------- ----------
Total other income (expense)................ 117,066 35,167 (171,107) (18,874)
Financing costs:
Interest charges............................... 220,459 193,818 - 414,277
Distributions on mandatorily redeemable
preferred securities of subsidiary trusts..... 15,750 23,050 - 38,800
------------- ------------- ----------- ----------- ----------
Total financing costs....................... 236,209 216,868 - 453,077
Income before income taxes...................... 224,336 459,987 66,283 750,606
Income taxes.................................... - 113,390 66,283 179,673
------------- ------------- ----------- ----------- ----------
Net income...................................... 224,336 346,597 - 570,933
Preferred dividends & redemption premiums of
NSP............................................ 5,292 - - 5,292
------------- ------------- ----------- ----------- ----------
Earnings available for common shareholders...... $ 219,044 $ 346,597 $ - $ - $ 565,641
============= ============= =========== =========== ==========
Average common shares outstanding (Note 1)...... 153,366 115,211 63,366 331,943
Average common and potentially diluted shares
outstanding (Note 1)........................... 153,443 115,233 63,378 332,054
Basic and diluted earnings per share............ $ 1.43 $ 3.01 $ 1.70
============= ============= ==========
See accompanying notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
148
Unaudited Pro Forma Combined Condensed Statement of Income
Reflecting Completion of the NCE/NSP Merger
Year ended December 31, 1998
(Thousands of Dollars, Except per Share Data)
Northern New Century Reporting
States Power Energies Adjustments Pro Forma Pro Forma
(as Reported) (as Reported) (Note 2) Adjustments Combined
------------- ------------- ----------- ----------- ----------
Operating revenues:
Electric....................................... $ 2,362,351 $ 2,624,057 $ (1,089) $ $4,985,319
Gas............................................ 456,823 781,571 (128,390) 1,110,004
Nonregulated and other revenues................ - 72,143 311,709 383,852
Earnings from equity investments............... - - 115,985 115,985
------------- ------------- ----------- ----------- ----------
Total operating revenues.................... 2,819,174 3,477,771 298,215 6,595,160
Operating expenses:
Electric fuel and purchased power.............. 689,275 1,283,768 721 1,973,764
Cost of gas sold and transported............... 267,050 502,879 (110,436) 659,493
Other operation and maintenance................ 794,332 547,136 - 1,341,468
Depreciation and amortization.................. 338,225 268,743 (8,055) 598,913
Taxes other than income taxes.................. 220,620 134,137 (2,175) 352,582
Income taxes - utility......................... 145,383 - (145,383) -
Nonregulated operating expenses................ - 90,607 368,365 458,972
------------- ------------- ----------- ----------- ----------
Total operating expenses.................... 2,454,885 2,827,270 103,037 5,385,192
Operating income................................ 364,289 650,501 195,178 1,209,968
Other income (expense):
Income from nonregulated businesses before
interest and taxes............................ 51,171 - (51,171) -
Equity earnings from unconsolidated
subsidiaries.................................. - 36,101 (36,101) -
Other income (deductions) - net................ 4,812 (4,250) 37,477 38,039
Income taxes on nonregulated and nonoperating
items - benefit............................... 40,588 - (40,588) -
------------- ------------- ----------- ----------- ----------
Total other income (expense)................ 96,571 31,851 (90,383) 38,039
Financing costs:
Interest charges............................... 162,737 181,906 - 344,643
Distributions on mandatorily redeemable
preferred securities of subsidiary trusts..... 15,750 17,561 - 33,311
Dividends & redemption premiums on preferred
stock of subsidiaries......................... - 5,332 - 5,332
------------- ------------- ----------- ----------- ----------
Total financing costs....................... 178,487 204,799 - 383,286
Income before income taxes...................... 282,373 477,553 104,795 864,721
Income taxes.................................... - 135,596 104,795 240,391
------------- ------------- ----------- ----------- ----------
Net income...................................... 282,373 341,957 - 624,330
Preferred dividends & redemption premiums of
NSP............................................ 5,548 - - 5,548
------------- ------------- ----------- ----------- ----------
Earnings available for common shareholders...... $ 276,825 $ 341,957 $ - $ - $ 618,782
============= ============= =========== =========== ==========
Average common shares outstanding (Note 1)...... 150,502 111,859 61,522 323,883
Average common and potentially diluted shares
outstanding (Note 1)........................... 150,743 112,008 61,604 324,355
Basic earnings per share........................ $ 1.84 $ 3.06 $ 1.91
============= ============= ==========
Diluted earnings per share...................... $ 1.84 $ 3.05 $ 1.91
============= ============= ==========
See accompanying notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
149
Unaudited Pro Forma Combined Condensed Statement of Income
Reflecting Completion of the NCE/NSP Merger
Year ended December 31, 1997
(Thousands of Dollars, Except per Share Data)
Northern New Century Reporting
States Power Energies Adjustments Pro Forma Pro Forma
(as Reported) (as Reported) (Note 2) Adjustments Combined
------------- ------------- ----------- ----------- ----------
Operating revenues:
Electric.......................................... $ 2,218,550 $ 2,451,421 $ (923) $ $4,669,048
Gas............................................... 515,196 780,623 (143,284) 1,152,535
Nonregulated and other revenues................... - 52,570 367,778 420,348
Earnings from equity investments.................. - - 52,766 52,766
------------- ------------- ----------- ----------- ----------
Total operating revenues....................... 2,733,746 3,284,614 276,337 6,294,697
Operating expenses:
Electric fuel and purchased power................. 596,238 1,181,354 - 1,777,592
Cost of gas sold and transported.................. 331,296 507,318 (131,929) 706,685
Other operation and maintenance................... 745,828 537,091 - 1,282,919
Depreciation and amortization..................... 325,880 243,078 (9,414) 559,544
Taxes other than income taxes..................... 227,893 129,280 (2,007) 355,166
Income taxes - utility............................ 144,855 - (144,855) -
Nonregulated operating expenses................... - 57,268 410,489 467,757
------------- ------------- ----------- ----------- ----------
Total operating expenses....................... 2,371,990 2,655,389 122,284 5,149,663
Operating income................................... 361,756 629,225 154,053 1,145,034
Other income (expense):
Income from nonregulated businesses before
interest and taxes............................... 12,078 - (12,078) -
Equity earnings from unconsolidated
subsidiaries..................................... - 34,166 (34,166) -
Merger costs...................................... (29,005) (34,088) - (63,093)
Other income (deductions)......................... 3,515 (27,267) 37,046 13,294
Income taxes on nonregulated and nonoperating
items - benefit.................................. 48,145 - (48,145) -
------------- ------------- ----------- ----------- ----------
Total other income (expense)................... 34,733 (27,189) (57,343) (49,799)
Financing costs:
Interest charges.................................. 144,732 187,028 - 331,760
Distributions on mandatorily redeemable
preferred securities of subsidiary trusts........ 14,437 7,850 - 22,287
Dividends & redemption premiums on preferred
stock of subsidiaries............................ - 11,752 - 11,752
------------- ------------- ----------- ----------- ----------
Total financing costs.......................... 159,169 206,630 - 365,799
Income before income taxes and extraordinary item.. 237,320 395,406 96,710 729,436
Income taxes....................................... - 133,919 96,710 230,629
------------- ------------- ----------- ----------- ----------
Income before extraordinary item................... 237,320 261,487 - 498,807
Extraordinary item - U.K. windfall tax............. - (110,565) - (110,565)
------------- ------------- ----------- ----------- ----------
Net income......................................... 237,320 150,922 - 388,242
Preferred dividends & redemption premiums of
NSP............................................... 11,071 - - 11,071
------------- ------------- ----------- ----------- ----------
Earnings available for common shareholders......... $ 226,249 $ 150,922 $ - $ - $ 377,171
============= ============= =========== =========== ==========
Average common shares outstanding (Note 1)......... 140,594 104,805 57,643 303,042
Average common and potentially diluted shares
outstanding (Note 1).............................. 140,870 104,872 57,680 303,422
Earnings per share - basic and diluted:
Income before extraordinary item.................. $ 1.61 $ 2.50 $ 1.61
Extraordinary item................................ - (1.06) (0.37)
------------- ------------- ----------
Total............................................ $ 1.61 $ 1.44 $1.24
============= ============= ==========
See accompanying notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
150
Unaudited Pro Forma Combined Condensed Balance Sheet
Reflecting Completion of the NCE/NSP Merger
December 31, 1999
(Thousands of Dollars)
Northern New Century Reporting Pro Form
States Power Energies Adjustments Adjustments Pro Forma
(as Reported) (as Reported) (Note 3) (Note 4) Combined
------------- ------------- ----------- ----------- -----------
ASSETS
Property, plant and equipment:
Electric..................................... $ 7,430,686 $ 7,496,942 $ (119,944) $ $14,807,684
Gas.......................................... 952,131 1,327,048 (12,663) 2,266,516
Other........................................ 375,058 977,548 2,422,850 3,775,456
------------- ------------- ----------- ----------- -----------
Total property, plant and equipment......... 8,757,875 9,801,538 2,290,243 20,849,656
Accumulated provision for depreciation....... (4,409,151) (3,540,516) (203,767) (8,153,434)
Nuclear fuel - net........................... 102,727 - - 102,727
------------- ------------- ----------- ----------- -----------
Net property, plant and equipment........... 4,451,451 6,261,022 2,086,476 12,798,949
Current assets:
Cash and cash equivalents.................... 55,968 83,763 - 139,731
Accounts receivable - net.................... 428,950 371,116 - 800,066
Accrued unbilled utility revenues............ 144,261 266,537 - 410,798
Fuel and gas inventories..................... 59,600 93,274 - 152,874
Material and supplies inventories............ 231,503 75,021 - 306,524
Prepayments and other........................ 113,524 137,427 - 250,951
------------- ------------- ----------- ----------- -----------
Total current assets........................ 1,033,806 1,027,138 - 2,060,944
Other assets:
Equity investments........................... 1,047,248 391,754 - 1,439,002
External decommissioning fund and
other investments........................... 561,682 89,404 - 651,086
Regulatory assets............................ 248,127 337,965 - 586,092
Non-regulated property - net................. 2,086,476 - (2,086,476) -
Other........................................ 338,941 214,709 - (45,000) 508,650
------------- ------------- ----------- ----------- -----------
Total other assets.......................... 4,282,474 1,033,832 (2,086,476) (45,000) 3,184,830
------------- ------------- ----------- ----------- -----------
Total assets.................................. $ 9,767,731 $ 8,321,992 $ - $ (45,000) $18,044,723
============= ============= =========== =========== ===========
LIABILITIES AND EQUITY
Capitalization:
Common stock (Note 1)........................ $ 389,324 $ 115,837 $ - $ 333,031 $ 838,192
Other stockholders' equity (Note 1).......... 2,168,206 2,616,853 - (378,031) 4,407,028
------------- ------------- ----------- ----------- -----------
Total common stockholders equity............ 2,557,530 2,732,690 - (45,000) 5,245,220
Preferred stockholders' equity............... 105,340 - 105,340
Mandatorily redeemable preferred securities
of subsidiary trusts........................ 200,000 294,000 - 494,000
Long-term debt............................... 3,453,364 2,374,121 - 5,827,485
------------- ------------- ----------- ----------- -----------
Total capitalization........................ 6,316,234 5,400,811 - (45,000) 11,672,045
Current liabilities:
Current portion of long-term debt............ 294,831 136,218 - 431,049
Short-term debt.............................. 799,159 633,527 - 1,432,686
Accounts payable............................. 321,382 471,757 - 793,139
Taxes accrued................................ 172,059 88,617 - 260,606
Other accrued liabilities.................... 238,705 326,964 - 565,669
------------- ------------- ----------- ----------- -----------
Total current liabilities................... 1,826,136 1,657,083 - 3,483,219
Other liabilities:
Deferred income taxes........................ 811,638 967,408 - 1,779,046
Deferred investment tax credits.............. 118,582 95,426 - 214,008
Regulatory liabilities....................... 461,569 - - 461,569
Other........................................ 233,572 201,264 - 434,836
------------- ------------- ----------- ----------- -----------
Total other liabilities..................... 1,625,361 1,264,098 - 2,889,459
------------- ------------- ----------- ----------- -----------
Total liabilities and equity.................. $ 9,767,731 $ 8,321,992 $ - $ (45,000) $18,044,723
============= ============= =========== =========== ===========
See accompanying notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
151
Notes to Unaudited Pro Forma Combined Condensed Financial Statements
1. The unaudited pro forma combined condensed financial statements reflect the
conversion of each share of NCE common stock, par value $1.00 per share,
into 1.55 share of common stock of the combined company and the
continuation of each share of NSP common stock, par value $2.50 per share,
as one share of common stock of the combined company ($2.50 par value), as
provided in the NCE/NSP Merger Agreement. The unaudited pro forma combined
condensed financial statements are presented as if the companies were
combined during all periods included therein.
2. The unaudited pro forma combined condensed income statements reflect
certain reclassifications to conform the presentation of operating results.
These reporting adjustments include: (a) separate presentation of
nonregulated revenues and equity earnings in operating revenues; (b)
separate presentation of all nonregulated expenses, including project
write-downs, in operating expenses; (c) presentation of nonregulated
interest and other income, including gains for project sales, in other
income (deductions) - net; and (d) presentation of all income taxes
(regulated and nonregulated) on a single line before arriving at net
income.
3. The unaudited pro forma combined condensed balance sheet at December 31,
1999 reflects reporting adjustments to conform the presentation of: (a)
investments and deferred charges (in other assets); (b) nonregulated
property (in property, plant and equipment); and (c) construction work in
progress (in other property, plant and equipment).
4. The allocation of the estimated costs savings resulting from the merger to
NCE, NSP and their customers, net of the costs incurred to achieve such
savings, will be subject to regulatory review and approval. At the time the
merger agreement was signed, cost savings resulting from the merger were
estimated to be approximately $1.1 billion over a ten-year period, net of
transaction costs (including fees for financial advisors, attorneys,
accountants, filings and printing) and net of costs to achieve the savings.
Nonrecurring costs directly attributable to the NCE/NSP Merger are being
deferred and total approximately $45 million as of December 31, 1999.
Assuming the business combination is accounted for as a pooling-of-
interests, these costs will be expensed upon the consummation of the
NCE/NSP Merger. The unaudited pro forma combined condensed statements of
income do not reflect any of these costs. The unaudited pro forma combined
condensed balance sheet has been adjusted to reflect a write-off of the
deferred costs and a related reduction of retained earnings.
5. Intercompany transactions (including purchased and exchanged power
transactions) between NCE and NSP during the periods presented were not
material and, accordingly, no pro forma adjustments were made to eliminate
such transactions.
152