SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) March 24, 1999
Exact name of registrant as specified in its charter,
State or other jurisdiction of incorporation or
organization, Address of principal executive offices and
Commission Registrant's Telephone Number, IRS Employer
File Number including area code Identification No.
- ----------- ------------------- ------------------
1-12927 NEW CENTURY ENERGIES, INC. 84-1334327
(a Delaware Corporation)
1225 17th Street
Denver, Colorado 80202
Telephone (303) 571-7511
Item 5. OTHER EVENTS
New Century Energies, Inc. ("NCE") and Northern States Power Company ("NSP")
held joint meeting with financial analysts on March 26, 1999 in New York and
Boston. The content of the meeting is summarized in the following slide
presentation.
Additionally, the following Summary NCE-NSP Merger Information has been provided
to financial analysts with whom NCE communicates with on an on-going basis.
FORWARD LOOKING INFORMATION
The following information includes "forward looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Investors and prospective investors are
cautioned that the forward-looking statements contained herein with respect to
the revenues, earnings, capital expenditures, resolution and impact of
litigation, competitive performance, or other prospects for the business of New
Century Energies, Inc., including any and all underlying assumptions and other
statements that are other than statements of historical fact, may be influenced
by factors that could cause actual outcomes and results to be materially
different than projected. Such factors include, but are not limited to, the
effects of weather, future economic conditions, the performance of generating
units, fuel prices and availability, regulatory decisions and the effects of
changes in state and federal laws, the pace of deregulation of domestic retail
natural gas and electricity markets, the timing and extent of change in
commodity prices for all forms of energy, capital spending requirements, the
evolution of competition, earnings retention and dividend payout policies,
changes in accounting standards, and other factors. From time to time, New
Century Energies, Inc., may publish or otherwise make available forward-looking
statements. All such subsequent forward-looking statements, whether written or
oral and whether made by or on behalf of each company, are also expressly
qualified by these cautionary statements.
1
SLIDE PRESENTATION
SLIDE 1
[Graphics Omitted] Cover page of NCE and NSP Company logos
SLIDE 2
Creating Shareholder Value
- - Two Financially Strong, Competitive Companies
- - Strategic Merger of Equals
- - Platform For Growth
- - Acceleration of Earnings
SLIDE 3
Terms of Transaction
NSP NCE
--- ---
Exchange Rate 1:1 1.55:1
Shares Outstanding (millions) 153.1 114.9
% of Ownership 46% 54%
Dividend Rate $1.50 per share
NCE dividend rate
adjusted for exchange ratio
SLIDE 4
[MAP Omitted]
Description of Map: Map of the central United States, identifying the states of
Colorado, Texas, New Mexico, Kansas, Oklahoma and Wyoming and the NCE service
territories and identifying the states of Minnesota, North Dakota, South Dakota,
Wisconsin, Michigan and Arizona and the NSP service territories.
SLIDE 5
Merger Statistics
Dollars in Billions
NSP NCE Combined
--- --- --------
Market Value* $4.1 $4.4 $8.5
Revenue
Electric $2.3 $2.7 $5.0
Gas $0.5 $0.8 $1.3
Total Assets $7.4 $7.7 $15.1
* As of 3/24/99
SLIDE 6
Total US Regulated Generation Ranking
Bar chart showing Regulated Generation Ranking
Company Thousands of Mw
Edison Int'l 15
New Company 15*
FPL Group 16
Duke Energy 17
Texas Utilities 21
Southern Company 32
* Excluding 6,587 Mw non-regulated generation.
SLIDE 7
Transmission Net Plant Investment
Bar chart showing Transmission Net Plant Investment
Company Dollars in Billions
Con Edison 1.1
FPL Group 1.2
PG&E 1.3
New Company 1.4
Edison Int'l 1.9
Southern Company 2.5
SLIDE 8
Customer Ranking - Regulated
Bar chart showing Customer Ranking
Company Millions of Domestic Customers
Texas Utilities 4.0
Con Edison 4.0
Edison Int'l 4.2
New Company (electric & gas) 4.4*
PSE&G 5.5
PG&E 8.2
* Excludes 2.1 million international customers
SLIDE 9
Non-regulated Operations
Non- Energy
regulated Energy Marketing
Generation Services and Trading Other
NRG Quixx EMI Planergy/ NSP e prime Seren Utility Engineering
ep3 Cadence Eloigne Natural Fuels
Ultra
Power
6,340 247 $54 $9 $121 $255 $29 $114
Mw Mw Million Million Million Million Million Million
Sales Sales Sales Sales Sales Sales
Combined: Combined: Combined: Combined:
6,587Mw $63 million $376 million $143 million
SLIDE 10
Market Capitalization
Bar chart showing Market Capitalization
Company Billions of Dollars
New Company $8.6
Edison Int'l $8.7
PSE&G $8.9
PECO Energy $9.7
FPL Group $10.4
Consolidated Edison $11.1
PG&E $12.6
Texas Utilities $12.9
Southern Co. $18.1
Duke Energy $21.0
SLIDE 11
Shareholder Benefits
- - Strategic fit
- - Improves competitive position
- - Accretive first year
- - Increased EPS growth rate
SLIDE 12
Merger Adds Significant EPS Growth
Line Graph Chart showing ranges of estimated EPS Growth Rates.
7-9% Growth Rate 5-7% Growth Rate
With Merger Without Merger
EPS Index Year EPS Index
- --------- ---- ---------
100 2000 100
107-109 2001 105-107
115-119 2002 110-115
123-130 2003 115-123
131-141 2004 121-131
140-154 2005 126-140
SLIDE 13
Bond Rating
NSP PSC SPS
--- --- ---
Standard & Poor's AA A A
Moody's Aa3 A3 Aa2
Fitch AA
Duff & Phelps A AA
SLIDE 14
Creating Shareholder Value
- Two Financially Strong, Competitive Companies
- Strategic Merger of Equals
- Platform For Growth
- Acceleration of Earnings
SLIDE 15
[MAP Omitted]
Description of Map: Map of the Central United States, identifying the states of
Colorado, Texas, New Mexico, Kansas, Oklahoma and Wyoming and the NCE service
territories and identifying the states of Minnesota, North Dakota, South Dakota,
Wisconsin, Michigan and Arizona and the NSP service territories.
SLIDE 16
[Graphics Omitted] Cover page of NCE and NSP Company logos
March 26, 1999
Dear Analyst:
As you know, it's been a busy week for us with announcements and phone calls
about our proposed merger with Northern States Power. Because of all that
activity, there's been considerable information shared in many different places.
We thought it would be useful to you for us to pull it all together into one
handy reference sheet.
The document is attached, filled with facts and figures about our companies and
the benefits to everyone of our combining in a true merger of equals.
Thank you for all your interest in our announcement. If you need further
information or wish to contact us with comments or concerns, please call either
Mike Pritchard on 303-294-2588 or Bob Husted on 303-294-2550.
Sincerely,
/s/ Richard C. Kelly
Richard C. Kelly
Executive Vice President
and CFO
Enclosures
New Century Energies, Inc.
Summary NCE-NSP Merger Information
March 26, 1999
1) NCE & NSP PROFILES - The underlying fundamentals of the two companies are
very strong.
a) Above-average estimated earnings per share growth rates (based on
analyst consensus)
b) Below-average production costs and retail rates
c) Above-average customer growth rates
d) Strong credit positions and business profiles
e) Healthy regulatory environments
f) Best quartile operators in significantly all categories
g) No anticipated stranded costs
2) MERGER SAVINGS
a) $1.1 billion in synergies for regulated business operations
i) Both companies are committed to achieving these savings
ii) NCE has successful track record at delivering what it promised
(and a good deal more)
iii) Announced synergies are at the lower end of the range observed in
other transactions (and are readily achievable)
iv) Major categories include:
(1) Duplicate operations
(2) Purchasing economies
(3) Information technology system integration
(4) Fuel and fuel transportation economies
(5) Geographic advantages
v) Synergies are primarily based on duplicate functions and systems
(1) Relatively evenly spread out over 10-year period
(2) Not dependent on geography for achievement
(3) Not capital intensive
b) Additional synergies can be achieved through:
i) Non-regulated cost savings
ii) Non-regulated revenue enhancements (especially at NRG)
iii) Independent transmission company
(1) Will facilitate the movement of power and the sharing of the
benefits of both companies' generation
(2) 50 MW of power has been transmitted prior to the merger and
additional amounts can be transferred now that NCE & NSP can
operate publicly
3) SHAREHOLDER VALUE GROWTH - By combining the complementary strengths of the
two companies, the potential for value creation is improved.
a) Enhanced earnings per share growth rate
b) Accretive to both companies' earnings per share in the first full year
after completion & thereafter
i) Excluding costs to achieve written off in first year
ii) Assuming 50% retention of annual synergies
c) Expected P/E multiple expansion
d) Critical mass in non-regulated assets
4) METRICS
a) Creates one of the nation's largest, best-positioned, global electric
& gas energy companies:
i) Market value - 10th largest electric & gas energy company in the
nation
ii) Electric generating capacity - 21,720 MW total
(1) 15,133 MW of regulated generation (5th largest)
(a) Well-run, low-cost, high-rated nuclear facilities
(2) 11th largest IPP in the world (NRG)
iii) Distribution operations - 3rd largest in total number of
customers served
iv) Electric customers
(1) 3.1 million in the U.S. (8th largest)
(2) 2.1 million in the U.K.
v) Gas customers
(1) 1.5 million in the U.S. (10th largest)
vi) Energy Masters and Planergy combined will form one of the largest
energy services firms in the nation
b) Better positions merged company to participate in the emerging
competitive market and capitalize on growth opportunities
c) Metric conclusions:
i) Combining two low-cost, very competitive companies
ii) Positioned to stay ahead of competition
iii) Maintain good relationships with regulatory commissions
iv) Creating a combined company with critical mass to control destiny
in all segments of business
5) BENEFITS OF SCALE
a) Economies of scale
i) Corporate infrastructure costs for deregulated market
ii) Product development costs
iii) Administrative and corporate functions
iv) Intra-company transfer of best practices
b) Increased purchasing power
i) Fuel - coal and gas
ii) Purchased power
iii) Fuel transportation
iv) Products for resale
v) Operating and construction materials
c) Stronger financial position
i) Flexibility to fund growth
ii) Lower cost of capital
iii) Provides higher earnings power and cash flow to fund strong
expansion of business with less external financing
iv) Greater common stock float, liquidity and analyst following
v) Size to participate in larger transactions
vi) Reduced future common stock issuance/dilution
6) MARKET REACH
a) Operations in very active markets --low-cost, high-growth electric and
gas customer base with fast growing, profitable non-regulated
international and domestic operations which are situated in and
adjacent to some of the fastest growing commercial markets in the
world.
i) Canada to Mexico
ii) California to New York
iii) United Kingdom
iv) Australia
v) Southern cone of South America
vi) Central Europe
7) DIVERSIFIED RISKS
a) Expanded asset mix in a variety of economies around the world which
are positioned to fully develop businesses around the assets
i) Diversification reduces the overall risk of the enterprise as
domestic markets head toward competition
ii) Operate in low-risk, high-quality foreign markets
b) Improved risk profile due to diversity of geography, fuel, regulation
and economies
i) Greater financial stability and less vulnerable to cyclical
swings and disruptions
c) Load and customer diversity
d) Expands marketing and trading activities through a broader asset base
e) Nuclear assets are reduced to 7% of combined generating capacity
8) COMPLETION ISSUES
a) Preliminary conversations with regulators and politicians have been
positive
b) Public Utility Holding Company Act issues have been thoroughly
researched and believe approval can and will be obtained in a timely
basis
c) No FERC market power issues expected, likely to be able to fast-track
and avoid hearings
d) Less local/neighboring company opposition expected given that
transaction is pan-regional
i) Should be less threatening to direct neighbors
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.
NEW CENTURY ENERGIES, INC.
/s/Teresa S. Madden
-----------------------------
Teresa S. Madden
Controller and
Principal Accounting Officer
Dated: March 26, 1999