Xcel Energy 2006 Annual Report Download - page 42

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Increasing costs associated with our defined benefit retirement plans and other employee-related benefits may adversely affect our
results of operations, financial position, or liquidity.
We have defined benefit and postretirement plans that cover substantially all of our employees. Assumptions related to future costs,
return on investments, interest rates and other actuarial assumptions have a significant impact on our funding requirements related to
these plans. These estimates and assumptions may change based on actual stock market performance, changes in interest rates and any
changes in governmental regulations. In addition, the Pension Protection Act of 2006 changed the minimum funding requirements for
defined benefit pension plans beginning in 2008. Therefore, our funding requirements may change and our contributions could be
required in the future.
Increasing costs associated with health care plans may adversely affect our results of operations, financial position or liquidity.
The costs of providing health care benefits to our employees and retirees have increased substantially in recent years. We believe that
our employee benefit costs, including costs related to health care plans for our employees and former employees, will continue to rise.
The increasing costs and funding requirements associated with our health care plans may adversely affect our results of operations,
financial position, or liquidity.
Risks Associated with Our Holding Company Structure
We must rely on cash from our subsidiaries to make dividend payments.
We are a holding company and thus our investments in our subsidiaries are our primary assets. Substantially all of our operations are
conducted by our subsidiaries. Consequently, our operating cash flow and our ability to service our indebtedness and pay dividends,
depends upon the operating cash flow of our subsidiaries and the payment of funds by them to us in the form of dividends. Our
subsidiaries are separate legal entities that have no obligation to pay any amounts due pursuant to our obligations or to make any funds
available for that purpose or for dividends on our common stock, whether by dividends or otherwise. In addition, each subsidiary’s
ability to pay dividends to us depends on any statutory and/or contractual restrictions that may be applicable to such subsidiary, which
may include requirements to maintain minimum levels of equity ratios, working capital or other assets. Our utility subsidiaries are
regulated by various state utility commissions, which generally possess broad powers to ensure that the needs of the utility customers
are being met.
If our utility subsidiaries were to cease making dividend payments, it could adversely affect our ability to pay dividends on our
common stock and preferred stock or otherwise meet our financial obligations.
Certain provisions of law, as well as provisions in our bylaws and shareholder rights plan, may make it more difficult for others to
obtain control of us, even though some shareholders might consider this favorable.
We are a Minnesota corporation and certain anti-takeover provisions of Minnesota law apply to us and create various impediments to
the acquisition of control of us or to the consummation of certain business combinations with us. In addition, our shareholder rights
plan contains provisions, which may make it more difficult to effect certain business combinations with us without the approval of our
board of directors. Finally, certain federal and state utility regulatory statutes may also make it difficult for another party to acquire a
controlling interest in us. These provisions of law and of our corporate documents, individually or in the aggregate, could discourage a
future takeover attempt which individual shareholders might deem to be in their best interests or in which shareholders would receive
a premium for their shares over current prices.
Item 1B — Unresolved SEC Staff Comments
None.