Xcel Energy 2001 Annual Report Download - page 5

– expanded its already impressive portfolio of wind generation, with a goal
of having 500 megawatts on line by the end of 2002, making Xcel Energy
one of the top wind utilities in the nation;
– received national recognition for its WindSource program;
– initiated a major effort to standardize operating procedures through state-
of-the-art technology;
– achieved merger synergies of more than $50 million; and
– pledged $3.5 million to the United Way, among other efforts to support
the communities in its service territory.
Xcel Energy also received recognition in 2001 for financial results. Your company
was added to the Dow Jones Sector Titans Indexes, a family of 18 indexes that
represent the leading global companies in several stock market sectors. We ranked
55th in Barron’s 500 top-performing companies based on a mix of stock market data,
cash flow analysis and revenue growth figures. And Forbes.com listed Xcel Energy
as a “top stock” based on the number of times it received “buy” recommendations
from the top-performing investment newsletters.
From a financial perspective, Xcel Energy began the year anticipating 2001 earnings
of $2.20. Due to high power prices, primarily in the West, the marketing and
trading group made an exceptionally strong showing during the first quarter, and
the company revised its earnings forecast to $2.30 per share, which it met. Earnings
per share from ongoing operations were $2.31 in 2001, an increase of 9 percent over
2000 results. Even with lower power prices and lower earnings from marketing and
trading, Xcel Energy expects to achieve earnings of $2.40 to $2.50 in 2002.
Over the next several years, the company expects to grow its earnings per share
at an average of 7 to 9 percent per year. This growth reflects the strength of our
traditional utility operations and numerous recent changes in the energy sector,
including the lower valuation of independent power producers (IPPs). Xcel Energy’s
IPP subsidiary, NRG Energy, has been affected by these changes.
NRG was created in 1989 to build additional shareholder value as a growth company
in the energy sector. NRG’s management team has grown the company rapidly and
today it is the third-largest IPP worldwide, with almost 20,000 megawatts
of power generation. Weighing numerous factors, including the current and
anticipated IPP valuations, the potential for credit rating agency action that would
lower bond ratings and NRG’s financing needs, Xcel Energy’s board of directors
approved an exchange offer to acquire all of the outstanding publicly held shares
of NRG as a way to increase Xcel Energy shareholder value. In order to provide
capital to infuse into NRG and reduce its debt leverage, Xcel Energy completed
a successful $500-million stock issuance in February. Pending successful
completion of the exchange offer, Xcel Energy will invest $600 million of equity
into NRG. It will focus NRG primarily on managed growth within the United
States, a stronger balance sheet, cost savings opportunities and reduced dependence
on external financing. NRG’s contribution to Xcel Energy’s earnings is expected
to grow about 15 percent per year.
XCEL ENERGY PURCHASES WIND POWER
FROM THE LLANO ESTACADO WIND RANCH
NEAR WHITE DEER, TEXAS.
XCEL ENERGY
WIND GENERATION ON LINE
in megawatts
100
200
300
400
500
097 98 99 00 01
25
138
316
348
469