UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q/A

 

Amendment No. 1

 

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended Sept. 30, 2007

 

or

 

 

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from               to              

 

Commission File Number: 1-3034

 

Xcel Energy Inc.

(Exact name of registrant as specified in its charter)

 

Minnesota

 

41-0448030

(State or other jurisdiction of

 

(I.R.S. Employer Identification No.)

incorporation or organization)

 

 

 

 

 

414 Nicollet Mall, Minneapolis, Minnesota

 

55401

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code (612) 330-5500

 

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 shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   x Yes o No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large Accelerated Filer x

 

Accelerated Filer o

 

Non-Accelerated Filer o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o 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 Oct. 19, 2007

Common Stock, $2.50 par value

 

419,930,078 shares

 

 



 

TABLE OF CONTENTS

 

EXPLANATORY NOTE

 

PART I — FINANCIAL INFORMATION

 

Item 1. Financial Statements (unaudited)

 

CONSOLIDATED STATEMENTS OF INCOME (restated)

 

CONSOLIDATED STATEMENTS OF CASH FLOWS (restated)

 

CONSOLIDATED BALANCE SHEETS (restated)

 

CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME (restated)

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (restated)

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

Item 4. Controls and Procedures

 

Part II — OTHER INFORMATION

 

Item 1. Legal Proceedings

 

Item 1A.Risk Factors

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

Item 6. Exhibits

 

SIGNATURES

 

Certifications Pursuant to Section 302

 

Certifications Pursuant to Section 906

 

Statement Pursuant to Private Litigation

 

 

2



 

EXPLANATORY NOTE

 

As previously reported in our Current Report on Form 8-K filed on June 20, 2007, a settlement in principle was reached between Xcel Energy and representatives of the United States government on June 19, 2007 concerning a tax dispute related to corporate-owned life insurance (COLI) policies purchased on the lives of Public Service Company of Colorado (PSCo) employees.  PSCo is a wholly owned subsidiary of Xcel Energy.  PSR Investments, Inc. (PSRI), a wholly owned subsidiary of PSCo, owned and managed these COLI life insurance policies.

 

The terms of the settlement have been previously reported.  The settlement has been implemented and the policies have been surrendered.

 

As a result of the settlement in principle, which required the surrender of the COLI policies, Xcel Energy had previously classified all amounts related to PSRI as a discontinued operation for all periods presented in its Forms 10-Q for the periods ended June 30, 2007 and Sept. 30, 2007.

 

Pursuant to a routine review of our periodic reports by the staff of the Securities and Exchange Commission, management reassessed   the appropriateness of the treatment of PSRI as a discontinued operation under SFAS 144 “Accounting for the Impairment or Disposal of Long-Lived Assets” and determined that PSRI operations, including the impact of the IRS settlement, should be presented for financial reporting purposes as part of continuing operations rather than as discontinued operations as previously reported in the Form 10-Q.

 

This Amendment No. 1 on Form 10-Q/A (the “Report”) is being filed to amend and restate Xcel Energy’s Quarterly Report on Form 10-Q for the quarter ended Sept. 30, 2007, that was filed on Oct. 26, 2007 (the “Original Report”).  The purpose of this amendment is to reflect the restatement of Xcel Energy’s previously issued financial statement as of and for the three and nine month periods ended Sept. 30, 2007 and 2006, and update other information, including Management’s Discussion and Analysis to reflect the restatement, in each case to reflect PSRI as a continuing operation.  These revised sections of this report have not otherwise been updated for events occurring after the date of the financial statements, except to reflect the COLI tax settlement and the related treatment of PSRI as a continuing operation and certain significant subsequent events included in Notes 5 and 16. All other information is unchanged and reflects the disclosures made at the time of the original filing. In addition, currently dated certifications from Xcel Energy’s Chief Executive Officer and Chief Financial Officer have been included as exhibits to this Form 10-Q/A.

 

3



 

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

 

XCEL ENERGY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

 

 

 

Three Months Ended Sept. 30,

 

Nine Months Ended Sept. 30,

 

(Thousands of Dollars, Except Per Share Data)

 

2007

 

2006

 

2007

 

2006

 

 

 

(As restated
See Note 2)

 

(As restated
See Note 2)

 

(As restated
See Note 2)

 

(As restated
See Note 2)

 

Operating revenues

 

 

 

 

 

 

 

 

 

Electric utility

 

$

2,199,533

 

$

2,159,844

 

$

5,935,031

 

$

5,792,287

 

Natural gas utility

 

184,161

 

230,293

 

1,442,451

 

1,519,423

 

Nonregulated and other

 

16,303

 

21,454

 

53,469

 

61,858

 

Total operating revenues

 

2,399,997

 

2,411,591

 

7,430,951

 

7,373,568

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

Electric fuel and purchased power — utility

 

1,101,844

 

1,160,896

 

3,113,314

 

3,106,804

 

Cost of natural gas sold and transported — utility

 

89,245

 

136,795

 

1,049,601

 

1,156,042

 

Cost of sales — nonregulated and other

 

4,452

 

4,096

 

14,179

 

16,763

 

Other operating and maintenance expenses — utility

 

444,521

 

411,200

 

1,342,085

 

1,289,583

 

Other operating and maintenance expenses — nonregulated

 

7,403

 

8,292

 

19,434

 

20,470

 

Depreciation and amortization

 

191,663

 

208,657

 

619,770

 

614,982

 

Taxes (other than income taxes)

 

66,024

 

71,552

 

210,437

 

221,413

 

Total operating expenses

 

1,905,152

 

2,001,488

 

6,368,820

 

6,426,057

 

Operating income

 

494,845

 

410,103

 

1,062,131

 

947,511

 

 

 

 

 

 

 

 

 

 

 

Interest and other income, net

 

3,002

 

2,149

 

3,170

 

2,686

 

Allowance for funds used during construction - equity

 

9,023

 

8,300

 

25,294

 

16,752

 

 

 

 

 

 

 

 

 

 

 

Interest charges and financing costs

 

 

 

 

 

 

 

 

 

Interest charges — includes other financing costs of $4,924, $6,165, $16,518 and $18,770, respectively

 

137,451

 

121,715

 

390,427

 

360,372

 

Interest and penalties related to COLI settlement

 

2,190

 

 

43,401

 

 

Allowance for funds used during construction - debt

 

(8,481

)

(8,363

)

(24,129

)

(22,245

)

Total interest charges and financing costs

 

131,160

 

113,352

 

409,699

 

338,127

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

375,710

 

307,200

 

680,896

 

628,822

 

Income taxes

 

120,990

 

83,025

 

239,967

 

156,899

 

Income from continuing operations

 

254,720

 

224,175

 

440,929

 

471,923

 

Income from discontinued operations, net of tax

 

97

 

287

 

2,376

 

2,112

 

Net income

 

254,817

 

224,462

 

443,305

 

474,035

 

Dividend requirements on preferred stock

 

1,060

 

1,060

 

3,180

 

3,180

 

Earnings available to common shareholders

 

$

253,757

 

$

223,402

 

$

440,125

 

$

470,855

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding (thousands)

 

 

 

 

 

 

 

 

 

Basic

 

419,822

 

406,123

 

413,555

 

405,234

 

Diluted

 

433,387

 

430,000

 

432,811

 

429,095

 

Earnings per share — basic

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.60

 

$

0.55

 

$

1.06

 

$

1.16

 

Income from discontinued operations

 

 

 

 

 

Earnings per share — basic

 

$

0.60

 

$

0.55

 

$

1.06

 

$

1.16

 

Earnings per share — diluted

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.59

 

$

0.53

 

$

1.03

 

$

1.12

 

Income from discontinued operations

 

 

 

0.01

 

 

Earnings per share — diluted

 

$

0.59

 

$

0.53

 

$

1.04

 

$

1.12

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.23

 

$

0.22

 

$

0.68

 

$

0.66

 

 

See Notes to Consolidated Financial Statements

 

4



 

XCEL ENERGY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Thousands of Dollars)

 

 

 

Nine Months Ended
Sept. 30,

 

 

 

2007

 

2006

 

 

 

(As restated
See Note 2)

 

(As restated
See Note 2)

 

Operating activities

 

 

 

 

 

Net income

 

$

443,305

 

$

474,035

 

Remove income from discontinued operations

 

(2,376

(2,112

)

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

645,007

 

643,520

 

Nuclear fuel amortization

 

38,570

 

35,359

 

Deferred income taxes

 

187,314

 

(105,793

)

Amortization of investment tax credits

 

(7,282

)

(7,354

)

Allowance for equity funds used during construction

 

(25,294

)

(16,752

)

Undistributed equity in earnings of unconsolidated affiliates

 

(1,632

)

(2,171

)

Share-based compensation expense

 

14,996

 

19,044

 

Net realized and unrealized hedging and derivative transactions

 

(16,269

)

(57,327

)

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

122,216

 

268,249

 

Accrued unbilled revenues

 

19,655

 

208,359

 

Inventories

 

(25,223

)

(6,620

)

Recoverable purchased natural gas and electric energy costs

 

207,586

 

273,239

 

Other current assets

 

(4,448

4,674

 

Accounts payable

 

(247,667

)

(341,207

)

Net regulatory assets and liabilities

 

(34,127

)

36,246

 

Other current liabilities

 

55,368

 

133,245

 

Change in other noncurrent assets

 

(22,288

)

(18,583

)

Change in other noncurrent liabilities

 

(8,335

)

(72,014

)

Operating cash flows provided by discontinued operations

 

57,237

 

129,744

 

Net cash provided by operating activities

 

1,396,313

 

1,595,781

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

Utility capital and construction expenditures

 

(1,481,693

)

(1,165,807

)

Allowance for equity funds used during construction

 

25,294

 

16,752

 

Purchase of investments in external decommissioning fund

 

(499,991

)

(699,593

)

Proceeds from the sale of investments in external decommissioning fund

 

467,447

 

665,814

 

Nonregulated capital expenditures and asset acquisitions

 

(958

)

(1,614

)

Proceeds from sale of assets

 

 

24,670

 

Cash obtained from consolidation of NMC

 

38,950

 

 

Change in restricted cash

 

(4,881

)

(3,085

)

Other investments

 

10,578

 

9,697

 

Investing cash flows provided by discontinued operations

 

 

42,377

 

Net cash used in investing activities

 

(1,445,254

)

(1,110,789

)

 

 

 

 

 

 

Financing activities

 

 

 

 

 

Short-term repayments — net

 

(206,075

)

(396,120

)

Proceeds from issuance of long-term debt

 

1,162,404

 

882,578

 

Repayment of long-term debt, including reacquisition premiums

 

(290,243

)

(773,901

)

Early participation payments on debt exchange

 

(4,859

)

 

Proceeds from issuance of common stock

 

8,970

 

7,747

 

Dividends paid

 

(281,249

)

(267,228

)

Net cash provided by (used in) financing activities

 

388,948

 

(546,924

)

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

340,007

 

(61,932

)

Net increase (decrease) in cash and cash equivalents - discontinued operations

 

(16,557

)

22,697

 

Cash and cash equivalents at beginning of year

 

37,458

 

72,196

 

Cash and cash equivalents at end of quarter

 

$

360,908

 

$

32,961

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

Cash paid for interest (net of amounts capitalized)

 

$

309,620

 

$

307,922

 

Cash paid for income taxes (net of refunds received)

 

(11,163

)

(773

)

Supplemental disclosure of non-cash investing transactions:

 

 

 

 

 

Property, plant and equipment additions in accounts payable

 

$

69,192

 

$

43,068

 

Supplemental disclosure of non-cash financing transactions:

 

 

 

 

 

Issuance of common stock for reinvested dividends and 401(k) plans

 

$

45,791

 

$

44,338

 

Issuance of common stock for senior convertible notes

 

125,632

 

 

 

See Notes to Consolidated Financial Statements

 

5



 

XCEL ENERGY INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Thousands of Dollars)

 

 

 

Sept. 30, 2007

 

Dec. 31, 2006

 

 

 

(As restated
See Note 2)

 

(As restated
See Note 2)

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

360,908

 

$

37,458

 

Accounts receivable, net of allowance for bad debts of $41,918 and $36,689, respectively

 

749,991

 

833,293

 

Accrued unbilled revenues

 

494,645

 

514,300

 

Materials and supplies inventories

 

164,258

 

158,721

 

Fuel inventories

 

118,270

 

95,651

 

Natural gas inventories

 

248,841

 

251,818

 

Recoverable purchased natural gas and electric energy costs

 

51,014

 

258,600

 

Derivative instruments valuation

 

116,319

 

101,562

 

Prepayments and other

 

208,220

 

205,743

 

Current assets held for sale and related to discontinued operations

 

139,345

 

177,040

 

Total current assets

 

2,651,811

 

2,634,186

 

Property, plant and equipment, at cost:

 

 

 

 

 

Electric utility plant

 

20,140,069

 

19,367,671

 

Natural gas utility plant

 

2,925,672

 

2,846,435

 

Common utility and other property

 

1,476,783

 

1,439,020

 

Construction work in progress

 

1,715,364

 

1,425,484

 

Total property, plant and equipment

 

26,257,888

 

25,078,610

 

Less accumulated depreciation

 

(10,090,852

)

(9,670,104

)

Nuclear fuel, net of accumulated amortization: $1,276,488 and $1,237,917, respectively

 

179,101

 

140,152

 

Net property, plant and equipment

 

16,346,137

 

15,548,658

 

Other assets:

 

 

 

 

 

Nuclear decommissioning fund and other investments

 

1,347,017

 

1,279,573

 

Regulatory assets

 

1,182,927

 

1,189,145

 

Prepaid pension asset

 

618,397

 

586,712

 

Derivative instruments valuation

 

399,198

 

437,520

 

Other

 

130,588

 

135,746

 

Noncurrent assets held for sale and related to discontinued operations

 

133,606

 

146,806

 

Total other assets

 

3,811,733

 

3,775,502

 

Total assets

 

$

22,809,681

 

$

21,958,346

 

LIABILITIES AND EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Current portion of long-term debt

 

$

306,997

 

$

336,411

 

Short-term debt

 

420,225

 

626,300

 

Accounts payable

 

875,574

 

1,101,270

 

Taxes accrued

 

245,314

 

252,384

 

Dividends payable

 

97,644

 

91,685

 

Derivative instruments valuation

 

86,910

 

83,944

 

Other

 

422,905

 

347,809

 

Current liabilities held for sale and related to discontinued operations

 

26,075

 

25,478

 

Total current liabilities

 

2,481,644

 

2,865,281

 

Deferred credits and other liabilities:

 

 

 

 

 

Deferred income taxes

 

2,446,675

 

2,256,599

 

Deferred investment tax credits

 

114,312

 

121,594

 

Asset retirement obligations

 

1,301,083

 

1,361,951

 

Regulatory liabilities

 

1,401,863

 

1,364,657

 

Pension and employee benefit obligations

 

657,560

 

704,913

 

Derivative instruments valuation

 

436,562

 

483,077

 

Customer advances

 

303,929

 

302,168

 

Other liabilities

 

128,575

 

119,633

 

Noncurrent liabilities held for sale and related to discontinued operations

 

22,012

 

5,473

 

Total deferred credits and other liabilities

 

6,812,571

 

6,720,065

 

Minority interest in subsidiaries

 

307

 

1,560

 

Commitments and contingent liabilities

 

 

 

 

 

Capitalization:

 

 

 

 

 

Long-term debt

 

7,252,800

 

6,449,638

 

Preferred stockholders’ equity - authorized 7,000,000 shares of $100 par value; outstanding shares: 1,049,800

 

104,980

 

104,980

 

Common stockholders’ equity - authorized 1,000,000,000 shares of $2.50 par value; outstanding shares:

 

 

 

 

 

Sept. 30, 2007 — 419,925,576; Dec. 31, 2006 — 407,296,907

 

6,157,379

 

5,816,822

 

Total liabilities and equity

 

$

22,809,681

 

$

21,958,346

 

 

See Notes to Consolidated Financial Statements

 

6



 

XCEL ENERGY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS’ EQUITY

AND COMPREHENSIVE INCOME

(UNAUDITED)

(Thousands)

 

 

 

Common Stock Issued

 

 

 

Accumulated

 

 

 

 

 

Shares

 

Par Value

 

Additional
Paid In
Capital

 

Retained
Earnings

 

Other
Comprehensive
Income (Loss)

 

Total Common
Stockholders’
Equity

 

 

 

 

 

 

 

 

 

(As restated
See Note 2)

 

 

 

(As restated
See Note 2)

 

Three months ended Sept. 30, 2007 and 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2006

 

405,560

 

$

1,013,901

 

$

4,012,799

 

$

632,263

 

$

(103,713

)

$

5,555,250

 

Net income

 

 

 

 

 

 

 

224,462

 

 

 

224,462

 

Minimum pension liability adjustment, net of tax of $21

 

 

 

 

 

 

 

 

 

(21

)

(21

)

Net derivative instrument fair value changes during the period, net of tax of $(11,309)

 

 

 

 

 

 

 

 

 

(15,966

)

(15,966

)

Unrealized gain - marketable securities, net of tax of $8

 

 

 

 

 

 

 

 

 

15

 

15

 

Comprehensive income for the period

 

 

 

 

 

 

 

 

 

 

 

208,490

 

Dividends declared:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cumulative preferred stock

 

 

 

 

 

 

 

(1,060

)

 

 

(1,060

)

Common stock

 

 

 

 

 

 

 

(90,451

)

 

 

(90,451

)

Issuances of common stock

 

965

 

2,411

 

13,551

 

 

 

 

 

15,962

 

Share-based compensation

 

 

 

 

 

(1,286

)

 

 

 

 

(1,286

)

Balance at Sept. 30, 2006

 

406,525

 

$

1,016,312

 

$

4,025,064

 

$

765,214

 

$

(119,685

)

$

5,686,905

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2007 (As previously reported)

 

419,510

 

$

1,048,774

 

$

4,175,833

 

$

779,603

 

$

(9,294

)

$

5,994,916

 

Adjustments (See Note 2)

 

 

 

 

 

 

 

 

 

 

(7,224

)

 

 

 

 

(7,224

)

Balance at June 30, 2007 (As restated See Note 2)

 

419,510

 

 

1,048,774

 

 

4,175,833

 

 

772,379

 

 

(9,294

)

 

5,987,692

 

Net income

 

 

 

 

 

 

 

254,817

 

 

 

254,817

 

Changes in unrecognized amounts of pension and retiree medical benefits, net of tax of $115

 

 

 

 

 

 

 

 

 

446

 

446

 

Net derivative instrument fair value changes during the period, net of tax of $1,042

 

 

 

 

 

 

 

 

 

(2,235

)

(2,235

)

Comprehensive income for the period

 

 

 

 

 

 

 

 

 

 

 

253,028

 

Dividends declared:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cumulative preferred stock

 

 

 

 

 

 

 

(1,060

)

 

 

(1,060

)

Common stock

 

 

 

 

 

 

 

(96,582

)

 

 

(96,582

)

Issuances of common stock

 

416

 

1,040

 

7,644

 

 

 

 

 

8,684

 

Share-based compensation

 

 

 

 

 

5,617

 

 

 

 

 

5,617

 

Balance at Sept. 30, 2007 (As restated)

 

419,926

 

$

1,049,814

 

$

4,189,094

 

$

929,554

 

$

(11,083

)

$

6,157,379

 

 

See Notes to Consolidated Financial Statements

 

7



 

 

 

Common Stock Issued

 

 

 

Accumulated

 

 

 

 

 

Shares

 

Par Value

 

Additional
Paid In
Capital

 

Retained
Earnings

 

Other
Comprehensive
Income (Loss)

 

Total Common
Stockholders’
Equity

 

 

 

 

 

 

 

 

 

(As restated
See Note 2)

 

 

 

(As restated
See Note 2)

 

Nine months ended Sept. 30, 2007
and 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at Dec. 31, 2005

 

403,387

 

$

1,008,468

 

$

3,956,710

 

$

562,138

 

$

(132,061

)

$

5,395,255

 

Net income

 

 

 

 

 

 

 

474,035

 

 

 

474,035

 

Minimum pension liability adjustment, net of tax of $21

 

 

 

 

 

 

 

 

 

(21

)

(21

)

Net derivative instrument fair value changes during the period, net of tax of $6,779

 

 

 

 

 

 

 

 

 

12,354

 

12,354

 

Unrealized gain - marketable securities, net of tax of $25

 

 

 

 

 

 

 

 

 

43

 

43

 

Comprehensive income for the period

 

 

 

 

 

 

 

 

 

 

 

486,411

 

Dividends declared:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cumulative preferred stock

 

 

 

 

 

 

 

(3,180

)

 

 

(3,180

)

Common stock

 

 

 

 

 

 

 

(267,779

)

 

 

(267,779

)

Issuances of common stock

 

3,138

 

7,844

 

48,841

 

 

 

 

 

56,685

 

Share-based compensation

 

 

 

 

 

19,513

 

 

 

 

 

19,513

 

Balance at Sept. 30, 2006

 

406,525

 

$

1,016,312

 

$

4,025,064

 

$

765,214

 

$

(119,685

)

$

5,686,905

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at Dec. 31, 2006

 

407,297

 

$

1,018,242

 

$

4,043,657

 

$

771,249

 

$

(16,326

)

$

5,816,822

 

FIN 48 adoption

 

 

 

 

 

 

 

2,207

 

 

 

2,207

 

Net income

 

 

 

 

 

 

 

443,305

 

 

 

443,305

 

Changes in unrecognized amounts of pension and retiree medical benefits, net of tax of $345

 

 

 

 

 

 

 

 

 

1,339

 

1,339

 

Net derivative instrument fair value changes during the period, net of tax of $2,926

 

 

 

 

 

 

 

 

 

3,900

 

3,900

 

Unrealized gain - marketable securities, net of tax of $2

 

 

 

 

 

 

 

 

 

4

 

4

 

Comprehensive income for the period

 

 

 

 

 

 

 

 

 

 

 

448,548

 

Dividends declared:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cumulative preferred stock

 

 

 

 

 

 

 

(3,180

)

 

 

(3,180

)

Common stock

 

 

 

 

 

 

 

(284,027

)

 

 

(284,027

)

Issuances of common stock

 

12,629

 

31,572

 

129,072

 

 

 

 

 

160,644

 

Share-based compensation

 

 

 

 

 

16,365

 

 

 

 

 

16,365

 

Balance at Sept. 30, 2007 (As restated)

 

419,926

 

$

1,049,814

 

$

4,189,094

 

$

929,554

 

$

(11,083

)

$

6,157,379

 

 

See Notes to Consolidated Financial Statements

 

8



 

XCEL ENERGY INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position of Xcel Energy Inc. and its subsidiaries (collectively, Xcel Energy) as of Sept. 30, 2007, and Dec. 31, 2006; the results of its operations and changes in stockholders’ equity for the three and nine months ended Sept. 30, 2007 and 2006; and its cash flows for the nine months ended Sept. 30, 2007 and 2006. Due to the seasonality of Xcel Energy’s electric and natural gas sales, such interim results are not necessarily an appropriate base from which to project annual results.

 

1.              Significant Accounting Policies

 

Except to the extent updated or described below, the significant accounting policies set forth in Note 1 to the consolidated financial statements included in Xcel Energy’s Current Report on Form 8-K/A filed on Dec. 13, 2007, appropriately represent, in all material respects, the current status of accounting policies and are incorporated herein by reference.

 

Income Taxes — Consistent with prior periods and upon adoption of Financial Accounting Standard Board (FASB) Interpretation No. 48 — “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109”, Xcel Energy records interest and penalties related to income taxes as interest charges in the Consolidated Statements of Income.

 

Reclassifications — Certain amounts in the Consolidated Statements of Cash Flows have been reclassified from prior-period presentation to conform to the 2007 presentation. The reclassifications reflect the presentation of unbilled revenues, recoverable purchased natural gas and electric energy costs and regulatory assets and liabilities and share-based compensation expense as separate items rather than components of other assets and other liabilities within net cash provided by operating activities. In addition, activity related to derivative transactions have been combined into net realized and unrealized hedging and derivative transactions. These reclassifications did not affect total net cash provided by (used in) operating, investing or financing activities within the Consolidated Statements of Cash Flows.

 

2.   Restatement of Financial Statements

 

Subsequent to the issuance of Xcel Energy’s consolidated financial statements for the quarter ended September 30, 2007, management determined that PSR Investments, Inc. (PSRI), a wholly owned subsidiary of PSCO, should not have been presented as a discontinued operation, as previously reported in the Form10-Q, rather, PSRI should have been included as part of continuing operations.  As a result, the accompanying consolidated financial statements have been restated.

 

As previously reported in our Current Report on Form 8-K filed on June 20, 2007, a settlement in principle was reached between Xcel Energy and representatives of the United States government on June 19, 2007 concerning a tax dispute related to corporate-owned life insurance (COLI) policies purchased on the lives of Public Service Company of Colorado (PSCo) employees.  PSCo is a wholly owned subsidiary of Xcel Energy.  PSRI owned and managed these COLI life insurance policies.

 

The terms of the settlement have been previously reported.  The settlement has been implemented and the policies have been surrendered.

 

As a result of the settlement in principle, which required the surrender of the COLI policies, Xcel Energy had previously classified all amounts related to PSRI as a discontinued operation for all periods presented in its Forms 10-Q for the periods ended June 30, 2007 and Sept. 30, 2007, that were filed on July 27, 2007 and Oct. 26, 2007, respectively.

 

Pursuant to a routine review of Xcel Energy’s periodic reports by the staff of the Securities and Exchange Commission management reassessed the appropriateness of the treatment of PSRI as a discontinued operation under SFAS 144 “Accounting for the Impairment or Disposal of Long-Lived Assets”. and determined that PSRI operations, including the impact of the IRS settlement, should be presented  as part of continuing operations for financial reporting purposes.   The inclusion of PSRI as part of continuing operations impacted Xcel Energy’s effective tax rate, which caused a change in previously reported income taxes. The effect of presenting PSRI as part of continuing operations rather than as discontinued operations as previously reported in the Form 10-Q is reflected in the tables below:

 

9



 

 

 

Consolidated Statements of Income

 

 

 

For the Three Months Ended September 30,

 

 

 

2007

 

2006

 

(Thousands of dollars)

 

As Previously Reported

 

Adjustment

 

As Restated

 

As Previously Reported

 

Adjustment

 

As Restated

 

Other operating and maintenance expenses-utility

 

$

443,599

 

$

922

 

$

444,521

 

$

410,063

 

$

1,137

 

$

411,200

 

Taxes (other than income taxes)

 

66,021

 

3

 

66,024

 

71,551

 

1

 

71,552

 

Total operating expenses

 

1,904,227

 

925

 

1,905,152

 

2,000,350

 

1,138

 

2,001,488

 

Operating income

 

495,770

 

(925

)

494,845

 

411,241

 

(1,138

)

410,103

 

Interest and other income, net

 

6,448

 

(3,446

)

3,002

 

5,582

 

(3,433

)

2,149

 

Interest charges

 

137,432

 

19

 

137,451

 

121,715

 

 

121,715

 

Interest and penalties related to COLI settlement

 

 

2,190

 

2,190

 

 

 

 

Total interest charges and financing costs

 

128,951

 

2,209

 

131,160

 

113,352

 

 

113,352

 

Income from continuing operations before income taxes

 

382,290

 

(6,580

)

375,710

 

311,771

 

(4,571

)

307,200

 

Income taxes

 

135,945

 

(14,955

)

120,990

 

97,923

 

(14,898

)

83,025

 

Income from continuing operations

 

246,345

 

8,375

 

254,720

 

213,848

 

10,327

 

224,175

 

Income (loss) from discontinued operations

 

5,369

 

(5,272

)

97

 

10,614

 

(10,327

)

287

 

Net income

 

251,714

 

3,103

 

254,817

 

224,462

 

 

224,462

 

Income from discontinued operations

 

250,654

 

3,103

 

253,757

 

223,402

 

 

223,402

 

Earnings per share from continuing operations - basic

 

0.58

 

0.02

 

0.60

 

0.52

 

0.03

 

0.55

 

Earnings per share from continuing operations - diluted

 

0.57

 

0.02

 

0.59

 

0.50

 

0.03

 

0.53

 

Earnings (loss) per share from discontinued operations - basic

 

0.02

 

(0.02

)

 

0.03

 

(0.03

)

 

Earnings (loss) per share from discontinued operations – diluted

 

0.01

 

(0.01

)

 

0.03

 

(0.03

)

 

Earnings per share – diluted

 

0.58

 

0.01

 

0.59

 

0.53

 

 

0.53

 

 

10



 

 

 

Consolidated Statements of Income

 

 

 

For the Nine Months Ended September 30,

 

 

 

2007

 

2006

 

(Thousands of dollars)

 

As Previously Reported

 

Adjustment

 

As Restated

 

As Previously Reported

 

Adjustment

 

As Restated

 

Other operating and maintenance expenses-utility

 

$

1,338,934

 

$

3,151

 

$

1,342,085

 

$

1,286,426

 

$

3,157

 

$

1,289,583

 

Taxes (other than income taxes)

 

210,432

 

5

 

210,437

 

221,410

 

3

 

221,413

 

Total operating expenses

 

6,365,664

 

3,156

 

6,368,820

 

6,422,897

 

3,160

 

6,426,057

 

Operating income

 

1,065,287

 

(3,156

)

1,062,131

 

950,671

 

(3,160

)

947,511

 

Interest and other income, net

 

15,503

 

(12,333

)

3,170

 

15,975

 

(13,289

)

2,686

 

Interest charges

 

390,407

 

20

 

390,427

 

360,297

 

75

 

360,372

 

Interest and penalties related to COLI settlement

 

 

43,401

 

43,401

 

 

 

 

Total interest charges and financing costs

 

366,278

 

43,421

 

409,699

 

338,052

 

75

 

338,127

 

Income from continuing operations before income taxes

 

739,806

 

(58,910

)

680,896

 

645,346

 

(16,524

)

628,822

 

Income taxes

 

255,178

 

(15,211

)

239,967

 

190,289

 

(33,390

)

156,899

 

Income from continuing operations

 

484,628

 

(43,699

)

440,929

 

455,057

 

16,866

 

471,923

 

Income (loss) from discontinued operations

 

(37,202

39,578

 

2,376

 

18,978

 

(16,866

)

2,112

 

Net income

 

447,426

 

(4,121

)

443,305

 

474,035

 

 

474,035

 

Income from discontinued operations

 

444,246

 

(4,121

)

440,125

 

470,855

 

 

470,855

 

Earnings per share from continuing operations - basic

 

 

1.16

 

 

(0.10

 

1.06

 

 

1.12

 

 

0.04

 

 

1.16

 

Earnings per share from continuing operations - diluted

 

 

1.13

 

 

(0.10

 

1.03

 

 

1.08

 

 

0.04

 

 

1.12

 

Earnings (loss) per share from discontinued operations - basic

 

 

(0.09

 

0.09

 

 

 

 

0.04

 

 

(0.04

)

 

 

Earnings (loss) per share from discontinued operations – diluted

 

 

(0.08

 

0.09

 

 

0.01

 

 

0.04

 

 

(0.04

)

 

 

Earnings per share - basic

 

 

1.07

 

 

(0.01

 

1.06

 

 

1.16

 

 

 

 

1.16

 

Earnings per share – diluted

 

 

1.05

 

 

(0.01

 

1.04

 

 

1.12

 

 

 

 

1.12

 

 

11



 

 

 

Consolidated Balance Sheet

 

 

 

September 30, 2007

 

December 31, 2006

 

(Thousands of dollars)

 

As Previously Reported

 

Adjustment

 

As Restated

 

As Previously Reported

 

Adjustment

 

As Restated

 

Cash and cash equivalents

 

$

360,868

 

$

40

 

$

360,908

 

$

37,458

 

$

 

$

37,458

 

Accounts receivable

 

750,131

 

(140

)

749,991

 

816,093

 

17,200

 

833,293

 

Prepayments and other

 

189,135

 

19,085

 

208,220

 

189,658

 

16,085

 

205,743

 

Current assets held for sale and related to discontinued operations

 

161,470

 

(22,125

)

139,345

 

229,633

 

(52,593

)

177,040

 

Total current assets

 

2,654,951

 

(3,140

)

2,651,811

 

2,653,494

 

(19,308

)

2,634,186

 

Nuclear decommissioning fund and other investments

 

1,346,946

 

71

 

1,347,017

 

1,271,362

 

8,211

 

1,279,573

 

Other assets

 

127,674

 

2,914

 

130,588

 

135,746

 

 

135,746

 

Noncurrent assets held for sale and related to discontinued operations

 

147,969

 

(14,363

)

133,606

 

162,586

 

(15,780

)

146,806

 

Total other assets

 

3,823,111

 

(11,378

)

3,811,733

 

3,783,071

 

(7,569

)

3,775,502

 

Total assets

 

22,824,199

 

(14,518

)

22,809,681

 

21,985,223

 

(26,877

)

21,958,346

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

873,200

 

2,374

 

875,574

 

1,100,600

 

670

 

1,101,270

 

Taxes accrued

 

234,609

 

10,705

 

245,314

 

271,691

 

(19,307

)

252,384

 

Other current liabilities

 

397,747

 

25,158

 

422,905

 

347,809

 

 

347,809

 

Current liabilities held for sale and related to discontinued operations

 

63,332

 

(37,257

)

26,075

 

26,149

 

(671

)

25,478

 

Total current liabilities

 

2,480,664

 

980

 

2,481,644

 

2,884,589

 

(19,308

)

2,865,281

 

Deferred income taxes

 

2,458,052

 

(11,377

)

2,446,675

 

2,264,164

 

(7,565

)

2,256,599

 

Noncurrent liabilities held for sale and related to discontinued operations

 

22,012

 

 

22,012

 

5,477

 

(4

)

5,473

 

Total deferred credits and other liabilities

 

6,823,948

 

(11,377

)

6,812,571

 

6,727,634

 

(7,569

)

6,720,065

 

Common stockholders’ equity

 

6,161,500

 

(4,121

)

6,157,379

 

5,816,822

 

 

5,816,822

 

Total liabilities and equity

 

22,824,199

 

(14,518

)

22,809,681

 

21,985,223

 

(26,877

)

21,958,346

 

 

12



 

 

 

Consolidated Cash Flow Statement

 

 

 

For the Nine Months Ended September 30,

 

 

 

2007

 

2006

 

(Thousands of dollars)

 

As Previously Reported

 

Adjustment

 

As Restated

 

As Previously Reported

 

Adjustment

 

As Restated

 

Net income

 

$

447,426

 

$

(4,121

)

$

443,305

 

$

474,035

 

$

 

$

474,035

 

Remove loss (income) from discontinued operations

 

 

37,202

 

 

(39,578

)

 

(2,376

)

 

(18,978

 

16,866

 

 

(2,112

)

Deferred income taxes

 

189,334

 

(2,020

)

187,314

 

(117,707

11,914

 

(105,793

)

Change in accounts receivable

 

104,876

 

17,340

 

122,216

 

242,288

 

25,961

 

268,249

 

Change in other current assets

 

3,289

 

(7,737

)

(4,448

4,505

 

169

 

4,674

 

Change in accounts payable

 

(249,371

1,704

 

(247,667

(341,283

76

 

(341,207

)

Change in other current liabilities

 

197

 

55,171

 

55,368

 

166,918

 

(33,673

)

133,245

 

Change in other noncurrent assets

 

(19,374

(2,914

)

(22,288

(18,583

 

(18,583

)

Change in other noncurrent liabilities

 

(9,435

1,100

 

(8,335

(72,014

 

(72,014

)

Operating cash flows provided by discontinued operations

 

84,242

 

(27,005

)

57,237

 

151,590

 

(21,846

)

129,744

 

Net cash provided by operating activities

 

1,404,373

 

(8,060

)

1,396,313

 

1,596,314

 

(533

)

1,595,781

 

Other investments

 

2,438

 

8,140

 

10,578

 

9,238

 

459

 

9,697

 

Net cash used in investing activities

 

(1,453,394

8,140

 

(1,445,254

(1,111,248

459

 

(1,110,789

)

Net increase in cash and cash equivalents

 

339,927

 

80

 

340,007

 

(61,858

(74

)

(61,932

)

Net increase (decrease) in cash and cash equivalents-discontinued operations

 

(16,517

(40

)

(16,557

22,660

 

37

 

22,697

 

Cash and cash equivalents at beginning of year

 

37,458

 

 

37,458

 

71,382

 

814

 

72,196

 

Cash and cash equivalents at end of quarter

 

360,868

 

40

 

360,908

 

32,184

 

777

 

32,961

 

 

3.          Recently Issued Accounting Pronouncements

 

Fair Value Measurements (Statement of Financial Accounting Standards (SFAS) 157) — In September 2006, the FASB issued SFAS 157, which provides a single definition of fair value, together with a framework for measuring it, and requires additional disclosure about the use of fair value to measure assets and liabilities. SFAS 157 also emphasizes that fair value is a market-based measurement, and sets out a fair value hierarchy with the highest priority being quoted prices in active markets. Fair value measurements are disclosed by level within that hierarchy. SFAS 157 is effective for financial statements issued for fiscal years beginning after Nov. 15, 2007. Xcel Energy is evaluating the impact of SFAS 157 on its financial condition and results of operations.

 

The Fair Value Option for Financial Assets and Financial Liabilities - Including an Amendment of FASB Statement No. 115 (SFAS 159) —  In February 2007, the FASB issued SFAS 159, which provides companies with an option to measure, at specified election dates, many financial instruments and certain other items at fair value that are not currently measured at fair value. A company that adopts SFAS 159 will report unrealized gains and losses on items, for which the fair value option has been elected, in earnings at each subsequent reporting date. This statement also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. This statement is effective for fiscal years beginning after Nov. 15, 2007. Xcel Energy is evaluating the impact of SFAS 159 on its financial condition and results of operations.

 

4.              Discontinued Operations

 

A summary of the subsidiaries presented as discontinued operations is discussed below. Results of operations for divested businesses and the results of businesses held for sale are reported, for all periods presented, as discontinued operations. In addition, the assets and liabilities of the businesses divested and held for sale in 2007 and 2006 have been reclassified to assets and liabilities held for sale in the Consolidated Balance Sheets.

 

13



 

Assets held for sale are valued on an asset-by-asset basis at the lower of carrying amount or fair value less costs to sell. In applying those provisions, management considered cash flow analyses, bids and offers related to those assets and businesses. Assets held for sale are not depreciated.

 

Regulated Utility Segments

 

Cheyenne Light, Fuel and Power Company (Cheyenne), which was sold in 2005, had an impact on Xcel Energy’s financial statements in 2006 relating to tax adjustments.

 

Nonregulated Subsidiaries — All Other Segment

 

All other includes activities related to our nonregulated subsidiaries including: Seren Innovations Inc., NRG Energy, Inc., e prime, Xcel Energy International, Utility Engineering, and Quixx.  The assets of the subsidiary or the entire subsidiary were divested in 2006 or earlier.  The activity in these entities is due to completion of final disposition or dissolution.

 

Summarized Financial Results of Discontinued Operations

 

(Thousands of dollars)

 

Utility
Segments

 

All Other

 

Total

 

 

 

 

 

 

 

 

 

Three months ended Sept. 30, 2007

 

 

 

 

 

 

 

Operating revenues

 

$

 

$

 

$

 

Operating income, interest and other income, net

 

 

(1,172

)

(1,172

Pretax income from discontinued operations

 

 

1,172

 

1,172

 

Income tax expense (benefit)

 

(79

)

1,154

 

1,075

 

Net income from discontinued operations

 

$

79

 

$

18

 

$

97

 

 

 

 

 

 

 

 

 

Three months ended Sept. 30, 2006

 

 

 

 

 

 

 

Operating revenues

 

$

 

$

1,374

 

$

1,374

 

Operating expense, interest and other income, net

 

 

2,583

 

2,583

 

Pretax loss from discontinued operations

 

 

(1,209

)

(1,209

)

Income tax benefit

 

(1,068

)

(428

)

(1,496

)

Net income (loss) from discontinued operations

 

$

1,068

 

$

(781

)

$

287

 

 

(Thousands of dollars)

 

Utility
Segments

 

All Other

 

Total

 

 

 

 

 

 

 

 

 

Nine months ended Sept. 30, 2007

 

 

 

 

 

 

 

Operating revenues

 

$

 

$

36

 

$

36

 

Operating income, interest and other income, net

 

 

(2,971

)

(2,971

Pretax income from discontinued operations

 

 

3,007

 

3,007

 

Income tax expense (benefit)

 

(81

)

712

 

631

 

Net income from discontinued operations

 

$

81

 

$

2,295

 

$

2,376

 

 

 

 

 

 

 

 

 

Nine months ended Sept. 30, 2006

 

 

 

 

 

 

 

Operating revenues

 

$

 

$

6,212

 

$

6,212

 

Operating expense (income), interest and other income, net

 

(18

)

8,748

 

8,730

 

Pretax (loss) income from discontinued operations

 

18

 

(2,536

)

(2,518

)

Income tax benefit

 

(2,233

)

(2,397

)

(4,630

)

Net income (loss) from discontinued operations

 

$

2,251

 

$

(139

)

$

2,112

 

 

14



 

The major classes of assets and liabilities held for sale and related to discontinued operations are as follows:

 

(Thousands of dollars)

 

Sept. 30, 2007

 

Dec. 31, 2006

 

 

 

 

 

 

 

Cash

 

$

9,172

 

$

25,729

 

Accounts receivables, net

 

1,414

 

421

 

Deferred income tax benefits

 

93,904

 

144,740

 

Other current assets

 

34,855

 

6,150

 

Current assets held for sale and related to discontinued operations

 

$

139,345

 

$

177,040

 

Net property, plant and equipment

 

$

 

$

174

 

Deferred income tax benefits

 

123,091

 

144,564

 

Other noncurrent assets

 

10,515

 

2,068

 

Noncurrent assets held for sale and related to discontinued operations

 

$

133,606

 

$

146,806

 

Accounts payable

 

$

1,262

 

$

1,560

 

Other current liabilities

 

24,813

 

23,918

 

Current liabilities held for sale and related to discontinued operations

 

$

26,075

 

$

25,478

 

Other noncurrent liabilities

 

$

22,012

 

$

5,473

 

Noncurrent liabilities held for sale and related to discontinued operations

 

$

22,012

 

$

5,473

 

 

5.              Income Taxes

 

COLI — In April 2004, Xcel Energy filed a lawsuit against the U.S. government in the U.S. District Court for the District of Minnesota to establish its right to deduct the interest expense that had accrued during tax years 1993 and 1994 on policy loans related to its COLI policies that insured the lives of certain PSCo employees. These policies are owned by PSRI, a wholly owned subsidiary of PSCo.

 

After Xcel Energy filed this suit, the IRS sent three statutory notices of deficiency of tax, penalty and interest for 1995 through 2002. Xcel Energy filed U.S. Tax Court petitions challenging those notices. PSRI also continued to take deductions for interest expense on policy loans for subsequent years. The total exposure for the tax years 1993 through 2007 was approximately $583 million, which included income tax, interest and potential penalties.

 

On June 19, 2007, Xcel Energy and the United States reached a settlement in principle regarding this dispute.