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MANAGEMENT’S DISCUSSION AND ANALYSIS
XCEL ENERGY 2003 ANNUAL REPORT 25
and included in continuing operations and reported as Special Charges. Approximately $12 million of these costs were incurred in 2003 and $5 million
were incurred in 2002, which reduced after-tax earnings by approximately 2 cents per share and 1 cent per share, respectively. Costs in 2003 included
approximately $32 million of financial advisor fees, legal costs and consulting costs related to the NRG bankruptcy transaction. These charges were
partially offset by a $20 million pension curtailment gain related to the termination of NRG employees from Xcel Energy’s pension plan. In 2003,
Xcel Energy also recorded a $7 million charge in connection with the suspension of the formation of the independent transmission company TRANSLink
Transmission Co., LLC (TRANSLink). See Note 2 to the Consolidated Financial Statements for further discussion of these special charges.
Other Nonregulated In 2003, Utility Engineering sold water rights, resulting in a pretax gain (reported as nonoperating income) of $15 million.
The gain increased after-tax income by approximately 2 cents per share.
STATEMENT OF OPERATIONS ANALYSIS – DISCONTINUED OPERATIONS
A summary of the various components of discontinued operations is as follows for the years ended Dec. 31:
(Millions of dollars) 2003 2002 2001
Income (loss)
Viking Gas Transmission Co. $21.9 $ 9.4 $ 5.0
Black Mountain Gas 2.4 1.0 1.0
Regulated natural gas utility segment – income 24.3 10.4 6.0
NRG segment – income (loss) (251.4) (3,444.1) 195.1
Xcel Energy International (45.5) (17.1) (2.9)
e prime (17.8) 1.5 8.0
Other (1.6) (2.4) (2.3)
NRG-related tax benefits 404.4 706.0 –
Nonregulated/other – income 339.5 688.0 2.8
Total income (loss) from discontinued operations $112.4 $(2,745.7) $203.9
Earnings (loss) per share
Viking Gas Transmission Co. $0.05 $ 0.03 $ 0.02
Black Mountain Gas 0.01 ––
Regulated natural gas utility segment – income per share 0.06 0.03 0.02
NRG segment – income (loss) per share (0.60) (8.95) 0.56
Xcel Energy International (0.11) (0.05) (0.01)
e prime (0.04) – 0.02
NRG-related tax benefits 0.96 1.83 –
Nonregulated/other – income per share 0.81 1.78 0.01
Total income (loss) per share from discontinued operations $0.27 $(7.14) $ 0.59
Regulated Natural Gas Utility Results – Discontinued Operations
During 2003, Xcel Energy completed the sale of two subsidiaries in its regulated natural gas utility segment: Viking, including its interest in Guardian
Pipeline, LLC, and BMG. After-tax disposal gains of $23.3 million, or 6 cents per share, were recorded for the natural gas utility segment, primarily
related to the sale of Viking.
Viking had minimal income in 2003, as it was sold in January of that year. Income from Viking was higher in 2002 compared with 2001 primarily due
to increased revenues.
NRG Results – Discontinued Operations
Due to NRG’s emergence from bankruptcy in December 2003 and Xcel Energy’s corresponding divestiture of its ownership interest in NRG, Xcel Energy’s
share of NRG results for current and prior periods is now shown as a component of discontinued operations.
2003 NRG Results Compared with 2002 As a result of NRG’s bankruptcy filing in May 2003, Xcel Energy ceased the consolidation of NRG and
began accounting for its investment in NRG using the equity method in accordance with Accounting Principles Board Opinion No. 18 – “The Equity
Method of Accounting for Investments in Common Stock.” After changing to the equity method, Xcel Energy was limited in the amount of NRG’s
losses subsequent to the bankruptcy date that it was required to record. In accordance with these limitations under the equity method, Xcel Energy
stopped recognizing equity in the losses of NRG subsequent to the quarter ended June 30, 2003. These limitations provided for loss recognition by Xcel
Energy until its investment in NRG was written off to zero, with further loss recognition to continue if its financial commitments to NRG exist beyond
amounts already invested. Xcel Energy initially recorded more losses than the limitations allow as of June 30, 2003, but upon Xcel Energy’s divestiture