Xcel Energy 2002 Annual Report Download - page 8

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NRG’s earnings for 2001 increased primarily due to new acquisitions in Europe and North America, as well as a full year of operation in
2001 of acquisitions made in the fourth quarter of 2000. In addition, NRG’s 2001 earnings reflected a reduction in the overall effective
tax rate and mark-to-market gains related to SFAS No. 133 – “Accounting for Derivative Instruments and Hedging Activity.” The overall
reduction in tax rates in 2001 was primarily due to higher energy credits, the implementation of state tax planning strategies and a higher
percentage of NRG’s overall earnings derived from foreign projects in lower tax jurisdictions.
NRG Special Charges – Impairments and Financial Restructuring As discussed previously, both the continuing and discontinued operations
of NRG in 2002 included material losses for asset impairments and estimated disposal losses. Also, NRG recorded other special charges
in 2002, mainly for incremental costs related to its financial restructuring and business realignment. See Notes 2 and 3 to the Consolidated
Financial Statements for further discussion of NRG’s special charges and discontinued operations, respectively.
other nonregulated subsidiaries and holding company results
Contribution to Xcel Energy’s earnings per share 2002 2001 2000
Xcel International $(0.05) $(0.02) $ 0.09
Eloigne Company 0.02 0.03 0.02
Seren Innovations (0.07) (0.08) (0.07)
Planergy International –(0.04) (0.08)
e prime –0.02 (0.02)
Financing costs and preferred dividends (0.11) (0.11) (0.07)
Other nonregulated/holding company results (0.01) 0.02 0.01
Subtotal – nonregulated/holding co. excluding tax benefit (0.22) (0.18) (0.12)
Tax benefit from investment in NRG (Note 11) 1.85 ––
Total nonregulated/holding company earnings per share $1.63 $(0.18) $(0.12)
Xcel International Xcel International currently comprises primarily power generation projects in Argentina, and previously included an
investment in Yorkshire Power.
In December 2002, a subsidiary of Xcel Argentina decided it would no longer fund one of its power projects in Argentina and defaulted
on its loan agreements. The default is not material to Xcel Energy. However, this decision resulted in the shutdown of the Argentina
plant facility, pending financing of a necessary maintenance outage. Updated cash flow projections for the plant were insufficient to
provide recovery of Xcel International’s investment. An impairment write-down of approximately $13 million, or 3 cents per share,
was recorded in 2002.
In August 2002, Xcel Energy announced it had sold its 5.25-percent interest in Yorkshire Power Group Limited for $33 million to CE
Electric UK. The sale of the 5.25-percent interest resulted in an after-tax loss of $8.3 million, or 2 cents per share, in 2002. The loss is
included in write-downs and disposal losses from investments on the Consolidated Statements of Operations. Xcel Energy and American
Electric Power Co. initially each held a 50-percent interest in Yorkshire, a UK retail electricity and natural gas supplier and electricity
distributor, before selling 94.75 percent of Yorkshire to Innogy Holdings plc in April 2001. As a result of this sales agreement, Xcel
Energy did not record any equity earnings from Yorkshire Power after January 2001. For more information, see Note 3 to the
Consolidated Financial Statements.
Eloigne Company Eloigne invests in affordable housing that qualifies for Internal Revenue Service tax credits. Eloigne’s earnings
contribution declined slightly in 2002 as tax credits on mature affordable housing projects began to decline. The actual decline in
Eloigne’s net income in 2002, compared with 2001, was only $716,000, with 2002 earnings representing 2.1 cents per share and
2001 earnings representing 2.5 cents per share.
Seren Innovations Seren operates a combination cable television, telephone and high-speed Internet access system in St. Cloud, Minn., and
Contra Costa County, California. Operation of its broadband communications network has resulted in losses. Seren projects improvement in
its operating results with positive cash flow anticipated in 2005, upon completion of its build-out phase, and a positive earnings contribution
anticipated in 2008.
Planergy International Planergy, a wholly owned subsidiary of Xcel Energy, provides energy management services. Planergy’s results
for 2002 improved, largely due to gains from the sale of a portfolio of energy management contracts, which increased earnings by
nearly 2 cents per share.
Planergy’s results for 2000 were reduced by special charges of 4 cents per share for the write-offs of goodwill and project development costs.
e prime e prime’s results for the year ended Dec. 31, 2001, reflect the favorable structure of its contractual portfolio, including natural
gas storage and transportation positions, structured products and proprietary trading in natural gas markets. e prime’s earnings were
lower in 2002, and higher in 2001, due to varying natural gas commodity trading margins, as discussed previously.
page 22 xcel energy inc. and subsidiaries
management’s discussion and analysis